Michek Company loans Sarasota Company $2,000,000 at 6% for 3 years on January 1, 2020. Michek intends

Question:

Michek Company loans Sarasota Company $2,000,000 at 6% for 3 years on January 1, 2020. Michek intends to hold this loan to maturity and has the financial ability to do so. The fair value of the loan at the end of each reporting period is as follows.

December 31, 2020.....................$2,050,000
December 31, 2021.......................2,020,000
December 31, 2022..................... .2,000,000

Prepare the journal entry(ies) at December 31, 2020, and December 31, 2022, for Michek related to these bonds, assuming

(a) It does not use the fair value option,

(b) it uses the fair value option. Interest is paid on January 1.

Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...

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