Heidi Baby Products issued 8% bonds with a face amount of $320 million on January 1,2016.The bonds sold for $300 million.For bonds of similar risk and maturity the market yield was 9%.Upon issuance,Heidi elected the option to report these bonds at their fair value.On June 30,2016,the fair value of the bonds was $310 million as determined by their market value on the NASDAQ.Will Heidi report a gain or will it report a loss when adjusting the bonds to fair value? If the change in fair value is attributable to a change in the general (risk-free)interest rate,did the rate increase or decrease? If the change in fair value is attributable to a change in the general (risk-free)interest rate,is the gain or loss reported as part of net income? Explain.

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The Answer of Heidi Baby Products issued 8% bonds with a face amount of $320 million on January 1,2016.The bonds sold for $300 million.For bonds of similar risk and maturity the market yield was 9%.Upon issuance,Heidi elected the option to report these bonds at their fair value.On June 30,2016,the fair value of the bonds was $310 million as determined by their market value on the NASDAQ.Will Heidi report a gain or will it report a loss when adjusting the bonds to fair value? If the change in fair value is attributable to a change in the general (risk-free)interest rate,did the rate increase or decrease? If the change in fair value is attributable to a change in the general (risk-free)interest rate,is the gain or loss reported as part of net income? Explain.

Heidi Baby Products Issued 8% Bonds with a Face Amount