Landis Company purchased $2,000,000 of 8%, 5-year bonds from Ritter, Inc. on January 1, 2018, with interest payable on July 1 and January 1. The bonds sold for $2,083,160 at an effective interest rate of 7%. Using the effective-interest method, Landis Company decreased the Available- for-Sale Debt Securities account for the Ritter, Inc. bonds on July 1, 2018 and December 31, 2018 by the amortized premiums of $7,080 and $7,320, respectively. At December 31, 2018, the fair value of the Ritter, Inc. bonds was $2,120,000. What should Landis Company report as other comprehensive income and as a separate component of stockholders' equity?a. $36,840
b. $14,400
c. $51,240
d. No entry should be made.
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Ответ:
correct option is c. $51,240
Explanation:
given data
fair value of Ritter Inc = $2,120,000
Landis Company purchased = $2,000,000
rate = 8 %
time = 5 year
bonds sold = $2,083,160
rate = 7%
premiums July 1 = $7,080
premiums December 31 = $7,320
solution
we get here Landis Company comprehensive income as separate component of stockholders' equity that is express as
comprehensive income = fair value of Ritter - ( bonds sold - premiums July 1 - premiums December 31 ) 1
put here value and we get
comprehensive income = $2,120,000 - ( $2,083,160 - $7,080 - $7,320 )
comprehensive income = $51240
so correct option is c. $51,240
Ответ:
A
Explanation: