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A company holds a $100,000 face value corporate bond, bought January 1, 2019, paying 3% annually on December 31, and maturing December 31, 2021. The company paid $102,884 for the bond, to yield 2%. The company categorizes the bond as a held-to-maturity investment, and its accounting year ends December 31. Round answers to the nearest dollar.
-What amount will the company report as interest revenue on the bond for 2020?

Question

Quizplus · Accepted Answer

2019 investment amortization = (3% x $100,000) - (2% x $102,884) = $942
2020 interest revenue = ($102,884 - $942) x 2% = $2,039

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