Determine dawsons net income for 2012

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Reference no: EM13553565

Presented below is selected information related to the financial instruments of Dawson Company at December 31, 2012. This is Dawson Company's first year of operations.


Carrying Amount

Fair Value (at December 31)

Investment in debt securities (intent is to hold to maturity)

$ 40,000

$ 41,000

Investment in Chen Company stock

800,000

910,000

Bonds payable

220,000

195,000

Instructions

(a) Dawson elects to use the fair value option whenever possible. Assuming that Dawson's net income is $100,000 in 2012 before reporting any securities gains or losses, determine Dawson's net income for 2012.

(b) Record the journal entry, if any, necessary at December 31, 2012, to record the fair value option for the bonds payable.

Reference no: EM13553565

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