Question

10 points Save Answer Sunshine Corporation buys and sells debt securities which it classifies as trading securities. The company's fiscal year ends on December 31. On December 27, 2021. Sunshine purchased Northern Communications bonds at par for $700,000. At December 31, the bonds had a fair value of 725,000. On January 3, 2022, the bonds were sold for $737,000. The amount included in 2022 net income as a result of this investment would be: (Do not add dollar sign; do not add comma by yourself to your amount; round the answer to the whole number; use minus sign if the amount is negative)

Answer 1

Gain on sale of bonds that is included in 2022 net income is $12,000.

Supporting calculations:

Cost of Trading securities	$700,000
Fair value of the bonds	$725,000
Unrealized gain due to fair value changes in 2021 ($725,000 - $700,000)	$25,000
Sale value of bonds in 2022	$737,000
Less: Fair value of bonds in 2021	($725,000)
Gain on sale included in 2022 net income	$12,000