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Determine the effect of the given transactions on net income

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Reference no: EM132904105

DeMarco Company had the selected transaction in FVTPL bond investments in 2008:

a. August 1- Bought 50,000 of Seibel Co.'s $10,000, 12% bonds at 104 plus accrued interest of $1,500,000. Interest is paid semiannually on May 1 and November 1.

b. August 31 - Bought 20,000 of Cyrus Corporation's $10,000 12% bonds at 98 plus accrued interest. Semiannual interest payment on June 30 and December 31.

c. December 1 - With brokerage fee of $1,600,000, was able to sell 20,000 of the Seibel Co. bonds at 102 fair value plus accrued interest.

d. December 31 - Cyrus Corporation and Seibel Co. bonds are quoted at 98 and 99.

Problem 1: Determine the effect of the given transactions on the net income or loss for 2008. Is it income or loss?

Reference no: EM132904105

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