Refer to the facts in problem P7-21. Data from P7-21 On January 1, 2016, Ganges Marine Supplies
Question:
Refer to the facts in problem P7-21.
Data from P7-21
On January 1, 2016, 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, 2016, 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, 2017 (two years after purchase).
Required:
Assume that Ganges classified the investment as FVOCI.
a. At what value should Ganges report the bonds on its December 31, 2016, balance sheet?
b. How much income or loss should Ganges report in 2016 in relation to this bond?
c . How much OCI should Ganges report for 2016 in relation to this bond?
d. How much OCI should Ganges report for 2017 in relation to this bond?
e. How much is accumulated OCI on the balance sheet at December 31, 2017?
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...
Step by Step Answer:
a Ganges should report the bonds at fair value of 4900 b Gan...View the full answer
