Refer to the facts in problem P7-15. On January 1, 2011, Ganges Marine Supplies purchased a Government

Question:

Refer to the facts in problem P7-15.
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 available for sale.
a. At what value should Ganges report the bonds on its December 31, 2011 How much income or loss should Ganges report in 2011 in relation to these shares?
c. How much other comprehensive income (OCI) should Ganges report for 2011 in relation to this bond?
d. How much OCI should Ganges report for 2012 in relation to this bond?
e. How much is accumulated OCI on the on December 31, 2012?
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...