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What revenue is recognized in the year two income statement

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Question - On January 1, Year One, Company X buys a $10,000 bond issued by Company Y. The bond has face value of $10,000 and pays cash interest of 8 percent per year. After a period of negotiations, the bond was sold to Company X at $9,232 to yield an effective annual rate of 10 percent. The bond has a fair value of $9,430 at the end of Year One and $9,510 at the end of Year Two. The effective rate method is being used. The fair value option has not been selected. If Company X plans to hold this bond until it's maturity at the end of the fifth year, what revenue is recognized in the Year Two income statement? (Round all computations to the nearest dollar)

A. $880

B. $936

C. $954

D. $1,016

Reference no: EM132251206

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