MNO Company purchased 10 $1,000, 9 percent bonds on February 28, 2014, at 105 plus $300 total accrued interest. MNO intends to sell the bonds to finance office remodelling in 2015. Interest is paid each April 30 and October 31. MNO paid $120 in broker's fees at the date of purchase. MNO's reporting year ends December 31. MNO should report this FVTPL investment on its 2014 balance sheet at:

Question

Quizplus · Accepted Answer

The bonds are purchased at 105% of face value, so the cost is $10,500. Adding the broker's fees of $120, the total cost is $10,620. Accrued interest is not included in the carrying amount for FVTPL investments.

MNO Company Purchased 10 $1,000, 9 Percent Bonds on February