Question
A company invests $700,000 in corporate bonds in 2019 and classifies them as available-for-sale. At the end of 2019, the fair value of the securities
A company invests $700,000 in corporate bonds in 2019 and classifies them as available-for-sale. At the end of 2019, the fair value of the securities is $650,000. In 2020, the company sells the bonds for $706,000.
Which statement is true concerning the entry made to record the sale of the bonds in 2020?
A. Other comprehensive income declines by $50,000, and income increases by $6,000. B. Other comprehensive income increases by $50,000 and income increases by $6,000. C. Other comprehensive income increases by $6,000, and there is no effect on income. D. There is no effect on other comprehensive income, and income increases by $6,000.
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