What amount is the balance of investment to be presented

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Question - Grid Gaming Corporation bought bonds with have a face amount of $5,000,000 on January 1, 2020. The company paid $4,600,000 plus transaction cost of $142,000 for the bond investment. The business model of the entity in managing the financial asset is to collect contractual cash flows that are solely payment of principal and interest and also to sell the bonds in the open market. The company has not elected the fair value option of measuring financial asset. The bonds will mature on December 31, 2022 and pay 6% interest annually on December 31 each year with 8% effective yield. The bonds are quoted at 105 on December 31, 2020 and 110 on December 31, 2021. The bonds are redeemed at face amount on December 31, 2022.

Using Original - FVOCI:

a. What amount is the interest income to be recognized during 2021?

b. What amounts is the total income to be recognized in the Income Statement of 2021?

c. On December 31, 2021, what amount is the balance of investment to be presented in the Statement of Financial Position?

Reference no: EM132898236

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