General Investment Co. (GIC) purchased bonds on January 1, 2012. GIC's accountant has projected the following amortization schedule from purchase until maturity: GIC sells the bonds for $196,000 immediately after the interest payment on 12/31/12. What gain or loss, if any, would GIC record on this date?

Question

General Investment Co. (GIC) purchased bonds on January 1, 2012. GIC's accountant has projected the following amortization schedule from purchase until maturity:  GIC sells the bonds for $196,000 immediately after the interest payment on 12/31/12. What gain or loss, if any, would GIC record on this date?

Quizplus · Accepted Answer

The carrying value at 12/31/12 is 196,370. GIC sells the bonds for $196,000, at a loss of $370.