Question: Presented below is selected information related to the financial instruments of Kirkland Company at December 31, 2014. This is Kirkland Companys first year of operations.

Presented below is selected information related to the financial instruments of Kirkland Company at December 31, 2014. This is Kirkland Company€™s first year of operations.

Instructions
(a) Kirkland elects to use the fair value option whenever possible. Assuming that Kirkland€™s net income is $360,000 in 2014 before reporting any securities gains or losses, determine Kirkland€™s net income for 2014.
(b) Record the journal entry, if any, necessary at December 31, 2014, to record the fair value option for the bondspayable.

Carrying Fair Value Amount (at December 31) Investment in debt securities (intent is to hold to maturity) 60,000 Investment in Olive Company stock Bonds payable 400,000 500,000 $59,000 430,000 490,000

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