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Which option is correct. A, B, C, or D
In 2019, Osgood Corporation purchased $6.1 million worth of 10-year municipal bonds at face value. On December 31, 2021, the bonds had a fair value of $4,300,000 and Osgood reclassified the bonds from held-to-maturity to trading securities. Osgood's December 31, 2021, balance sheet and the 2021 income statement would show the following:
Investment in bonds (TS) Income statement loss on investments
a. $4,300,000 $ 0
b. $4,300,000 $1,800,000
c. $6,100,000 $1,800,000
d. $6,100,000 $ 0
a) Option d.
b) Option c.
c) Option b.

Respuesta :

abiolataiwo2015

Answer:

b. $4,300,000 $1,800,000

Explanation:

Calculation for what Osgood's December 31, 2021, balance sheet and the 2021 income statement would show

First step is to find the Loss on investments using this formula

Income statement Loss on investments =Face value municipal bonds-Fair value

Let plug in the formula

Income statement Loss on investments=6,100,000-4,300,000

Income statement Loss on investments= $1,800,000

Second step is to find the investment in bonds

Based on the information given we were told that On December 31, 2021, the bonds had a Fair value of the amount of $4,300,000 which simply means that the Fair value amount of $4,300,000 will be the Investment in municipal bonds.

Therefore the Income statement Loss on investments will be $1,800,000 while Investment in municipal bonds will be $4,300,000.

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