On January 1, 2011, Anny Marine Supplies purchased a Government of Canada bond at par for $12,000. The bond has an interest rate of 7% and matures in three years. By December 31, 2011, market interest rates had increased such that the fair value of the bond decreased to $11,600. The fair value of the bond decreased further to $11,200 on December 31, 2012 (two years after purchase).
Required:
Assume that Anny classifies the investment as held to maturity.
a. At what value should Anny report the bond on its December 31, 2011 balance sheet?
b. How much income or loss should Anny report in 2011 in relation to this bond?
c. How much other comprehensive income (OCI)should Anny report in 2011 in relation to this bond?

Question

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The Answer of On January 1, 2011, Anny Marine Supplies purchased a Government of Canada bond at par for $12,000. The bond has an interest rate of 7% and matures in three years. By December 31, 2011, market interest rates had increased such that the fair value of the bond decreased to $11,600. The fair value of the bond decreased further to $11,200 on December 31, 2012 (two years after purchase).
Required:
Assume that Anny classifies the investment as held to maturity.
a. At what value should Anny report the bond on its December 31, 2011 balance sheet?
b. How much income or loss should Anny report in 2011 in relation to this bond?
c. How much other comprehensive income (OCI)should Anny report in 2011 in relation to this bond?

On January 1, 2011, Anny Marine Supplies Purchased a Government