Question
Blossom Company purchased $1300000 of 8%, 5-year bonds from Splish, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The
Blossom Company purchased $1300000 of 8%, 5-year bonds from Splish, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $1349896 at an effective interest rate of 7%. Using the effective interest method, Blossom Company decreased the Available-for-Sale Debt Securities account for the Splish, Inc. bonds on July 1, 2021 and December 31, 2021 by the amortized premiums of $5248 and $5392, respectively.
At December 31, 2021, the fair value of the Splish, Inc. bonds was $1362000. What should Blossom Company report as other comprehensive income and as a separate component of stockholders' equity?
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