In: Accounting
Question 2 (1 point)
On July 1, 20X1, Hathaway Inc. purchased a $100,000, five-year,
6% bond when the market rate of interest was 7%. Interest was
payable semi-annually on June 30 and December 31. The price paid
for the bond was $95,842. Hathaway has a December 31 year end and
reports its financial results in accordance with IFRS. Hathaway
irrevocably elects to classify this investment at FVPL to
significantly reduce a measurement inconsistency. On December 31,
20X1, the bond was actively trading for $96,900.
How much income will Hathaway recognize on its financial statement
for the year ended December 31, 20X1, relating to this
investment?
a- 1.058
b. 3,355
c- 4,058
d- 4,413