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Find the effect of the given transactions on the net income

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Reference no: EM132906430

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

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

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

Problem 2. As of Dec. 31, 2008, $__________ is the carrying value of the Investment in Bonds - Fair Value Through Profit or Loss.

Reference no: EM132906430

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