At December 31, 2013, EI Greco Company has an investment in 2,000 of the €1,000 8% bonds of Dublin Company with a carrying value of €2,000,000. The bonds, which mature on January 1, 2018, pay interest semiannually on July 1 and January 1. After collecting the interest on January 1, 2014, EI Greco sells the bonds for €2,220,000. EI Greco will recognize

Question

Quizplus · Accepted Answer

The gain on sale of debt investments is calculated as follows: 
Proceeds from sale: €2,220,000 
Carrying value: €2,000,000 
Gain on sale: €220,000 
Therefore, option B is the correct answer. Option A is incorrect because there is no unrealized loss since the investment was sold. Option C is incorrect because interest revenue of €160,000 was already recognized before the bonds were sold. Option D is incorrect because there was a gain on the sale of the debt investment, not a loss.

At December 31, 2013, EI Greco Company Has an Investment