On January 1, 2011, Ganges Marine Supplies purchased a Government of Canada bond at par for $5,000. The bond has an interest rate of 4% and matures in three years. By December 31, 2011, market interest rates had increased such that the fair value of the bond decreased to $4,900. The fair value of the bond decreased further to $4,700 on December 31, 2012 (two years after purchase).
Required:
Assume that Ganges classifies the investment as held to maturity.
a. At what value should Ganges report the bonds on its December 31, 2011 balance sheet?
b. How much income or loss should Ganges report in relation to these shares?
c. How much other comprehensive income (OCI) should Ganges report in relation to this bond?