1. On January 1, 2019, BLUE Company purchased 4,000 of 1,000 face value, 10% bonds of PINK Company for 4,270,600. The company has a business model of holding the financial asset to collect contractual cash flows and to sell the financial asset. The bonds will mature on January 1, 2023 pay interest semi-annually on January 1 and July 1. Bonds effective interest rate is 8%. In its December 31, 2019 income statement, how much should BLUE report as interest income on the bonds? A. 160,000 B. 169,657 C. 170,824 D. 340,481

2. On July 1, 2019, YELLOW Corporation acquired an investment at amortized cost in GREEN Companys 10-yr, 12% bonds, with face value of 5,000,000 for 5,386,300. Interest is payable semi-annually on January 1 and July 1. The bonds mature on July 1, 2024. Bonds effective rate is 10%. On December 31, 2020, YELLOW sold its debt instrument at 110. What amount of gain should YELLOW corporation recognize as a result of the disposal? A. 210,434 B. 245,956 C. 144,385 D. 176,604