Question: BE 1415 Reporting bonds at fair value L014-6 A1 Tool and Dye issued 8% bonds with a face amount of $160 million on January

BE 1415 Reporting bonds at fair value L014-6 A1 Tool and Dye

BE 1415 Reporting bonds at fair value L014-6 A1 Tool and Dye issued 8% bonds with a face amount of $160 million on January l, 2016. The bonds sold for $150 million. For bonds of similar risk and maturity the market yield was 9%. Upon issuance, A1 elected the option to report these bonds at their fair value. On June 30, 2016, the fair value of the bonds was $145 million as determined by their market value on the NASDAQ. Will A1 report a gain Or will it report a loss when adjusting the bonds to fair value? Ifthe 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?

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