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How much should blue report as interest income on the bonds

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Reference no: EM132945566

Problem 1: On January 1, 2019, BLUE Company purchased 4,000 of ?1,000 face value, 10% bonds of PINK Company for ?4,270,600. The company has a business model of holding the financial asset to collect contractual cash flows and to sell the financial asset. The bonds will mature on January 1, 2023 pay interest semi-annually on January 1 and July 1. Bonds effective interest rate is 8%. In its December 31, 2019 income statement, how much should BLUE report as interest income on the bonds?

a. ? 340,481

b. ? 160,000

c. ? 169,657

d. ? 170,824

Reference no: EM132945566

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