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Fowler Inc. purchased $75,000 of bonds on January 1, 2018. The bonds pay interest semiannually and...

Fowler Inc. purchased $75,000 of bonds on January 1, 2018. The bonds pay interest semiannually and mature in 20 years, at which time the $75,000 principal will be paid. The bonds do not pay any amounts other than interest and principal. Fowler's intention is to collect contractual cash flows and eventually sell the bonds within the next couple of years if the price is right. During 2018, the fair value of the bonds increased to $80,000. Fowler reports investments under IFRS NO. 9. How much unrealized gain or loss will Fowler include in the 2018 net income with respect to the bonds?

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Answer #1

Fair Value of the bond as on January 1, 2018 is $75,000 which increases to $80,000 but here, the bonds are intended to kept till maturity. Hence, no unrealized gain or shall be recorded.

Unrealized gain (loss) reported in net income = $ 0

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