When should fox report a gain on income statement for bonds

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Problem 1: Fox Co., a public, calendar-year reporting company, bought 500 of Owl Co. 3-year, 5% bonds issued at 103, on Owl's initial bond issuance, April 1, 2020. Fox expects to hold these bonds for about 18 months. When should Fox report a gain on its income statement for these bonds?

Group of answer choices

Option 1: When the market price of Owl bonds increase at current year-end

Option 2: When Fox sells Owl's bonds for a price above book value

Option 3: When Owl reports net income at current year-end

Option 4: When Owl pays interest to Fox at the next interest payment date

Reference no: EM132670184

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