Muir, lad. measures its trading securities at fair value. It has liabilities that it also measures using the fair value option. Muir has bonds outstanding (originally sold for $2,400,000) in the amount of $2,000,000 with a current bond premium of $340,000. The bonds were selling at 101 on the market at its year end. At what value should it report these bonds on its balance sheet at year end?

A) $2,000,000

B) $2,200,000

C) $2,340,000

D) $2,400,000

Answer: B

2,000,000 * 1.01 = 2,200,000

Parrish Industries has bonds outstanding (originally sold for $4,400,000) in the amount of $5,000,000 with a current bond discount of $100,000. The bonds were selling at 104 on the market at its year end. At what value should it report these bonds on its balance sheet at year end?

A) $5,000,000

B) $5,100,000

C) $4,900,000

D) $5,520,000