On January 1, 2014, Pacific Enterprise purchased 15-year, 6% bonds having maturity a value of $474,000. Interest is paid annually on December 31 and the bonds provide the bondholders a 5% yield. Pacific Enterprise uses the effective-interest method to amortize discount or premium.

At the time of acquisition, the bonds were classified as trading. The fair value of the bonds on December 31, 2018 is $489,000. The fair value of the bonds as of December 31 of the immediately preceding year (prior measurement date) was $442,000.

What is the amount of net income recognized in the 2018 income statement solely as a result of these bonds? (Note: if the net amount results in a loss, enter a minus sign '-' prior to the amount. If the net amount results in income, enter the amount as a positive amount.)

Answer rating: 100% (QA)

FV 474000 Year Cash Interest Interest Revenue5 x CV Premium amortization Carrying Value PMT 28440 47... View the full answer