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In 2018, Morgan bought $ 1 million in Megan bonds, at par value. The company's intention was to hold the bonds to maturity and had
In 2018, Morgan bought $ 1 million in Megan bonds, at par value. The company's intention was to hold the bonds to maturity and had the capacity to do so. He classified it as "to retain until maturity." Sadly, in 2019, a combination of problems at Megan's company and in the stock market caused the fair value of the bonds to drop to $ 600,000. Morgan attributes $ 250,000 of the $ 400,000 drop to credit losses and the other $ 150,000 to other causes (noncredit losses). What will be the impact in 2019 on the Statement of Income and Expenses (EIG) and on Other comprehensive income (OCI), given that there was impairment? Select one: to. $ 250,000 is recognized in the EIG and $ 150,000 as OCI (debit) b. No loss will be recognized in the EIG until the bonds are sold and the loss is realized. c. All $ 400,000 of loss is recognized in the EIG. d. All $ 400,000 loss is recognized as "OCI".
note: Im thinking its B because it's classified as held to maturity
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