Presented below is selected information related to the financial instruments of Dawson Ltd. at December 31, 2022 (amounts in thousands). This is Dawson Ltd.’s first year of operations.

Instructions

a. Dawson elects to use the fair value option whenever possible. Assuming that Dawson’s net income is ¥100,000 in 2022 before reporting any financial instrument gains or losses, determine Dawson’s net income for 2022.

b. Record the journal entry, if any, necessary at December 31, 2022, to record the fair value option for the bonds payable.

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Fair Value Carrying (at December 31) Amount Debt investments (intent is to hold for collection) ¥ 41,000 40,000 Bonds payable 220,000 195,000