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What is the amount of net income recognized

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Question - On January 1, 2014, Pacific Enterprise purchased 15-year, 6% bonds having maturity a value of $474,000. Interest is paid annually on December 31 and the bonds provide the bondholders a 5% yield. Pacific Enterprise uses the effective-interest method to amortize discount or premium.

At the time of acquisition, the bonds were classified as trading. The fair value of the bonds on December 31, 2018 is $489,000. The fair value of the bonds as of December 31 of the immediately preceding year (prior measurement date) was $442,000.

What is the amount of net income recognized in the 2018 income statement solely as a result of these bonds?

Reference no: EM132158232

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