Question: BE 1 4 - 1 5 Reporting bonds at fair value L O 1 4 - 6 2 AI Tool and Dye issued 8 %

14 - 15

Reporting bonds at fair value

\sqrt[]{L O 14 - 6}

AI Tool and Dye issued

8 %

bonds with a face amount of $

160

million on January

1, 2024 .

The bonds sold for $

150

million. For bonds of similar risk and maturity the market yield was

9 % .

Upon issuance, AI elected the option to report these bonds at their fair value. On June

30, 2024,

the fair value of the bonds was $

145

million as determined by their market value on the NASDAQ. Will AI report a gain or will it report a loss when adjusting the bonds to fair value? If the change in fair value is attributable to a change in the interest rate, did the rate increase or decrease? Will the gain or loss be reported in net income or as OCI?

BE 1 4 - 1 5 Reporting bonds at fair value L O 1

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