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27 March, 23:13

Crane Company purchased $1080000 of 8%, 5-year bonds from Swifty, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $1129896 at an effective interest rate of 7%. Using the effective interest method, Crane Company decreased the Available-for-Sale Debt Securities account for the Swifty, Inc. bonds on July 1, 2021 and December 31, 2021 by the amortized premiums of $3048 and $3192, respectively. At December 31, 2021, the fair value of the Swifty, Inc. bonds was $1164000. What should Crane Company report as other comprehensive income and as a separate component of stockholders' equity? $40344

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  1. 28 March, 00:57
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    Answer: $27,864

    Explanation:

    The amount that should be recorded as other comprehensive income is the fair value less the sales price and the amortized premiums to reflect the true value of the investment,

    = 1,164,000 - 1,129,896 - 3,048 - 3,192

    = $27,864

    $27,864 is the amount Crane Company should report as other comprehensive income and as a separate component of stockholders' equity.
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