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Prepare the journal entry at December

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Question - Indigo Company loans Sarasota Company $1,810,000 at 6% for 3 years on January 1, 2020. Indigo intends to hold this loan to maturity and has the financial ability to do so. The fair value of the loan at the end of each reporting period is as follows.

December 31, 2020 $1,858,000

December 31, 2021 1,829,000

December 31, 2022 1,810,000

Required - Prepare the journal entry at December 31, 2020, and December 31, 2022, for Indigo related to these bonds, assuming (a) it does not use the fair value option, and (b) it uses the fair value option. Interest is paid on January 1.

Reference no: EM132676966

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