Question
On January 1, 20Y1 MYCO Electronics issued $3 million in 5-year bonds for $2,862,613. The bonds pay 2% interest annually on December 31. The market
On January 1, 20Y1 MYCO Electronics issued $3 million in 5-year bonds for $2,862,613. The bonds pay 2% interest annually on December 31. The market rate of interest for bonds of comparable risk was 3% at the date of issuance. By the end of the year, the market rate of interest had increased to 4%. If MYCO elected to use the fair value option when accounting for these bonds, how did the bonds fair market value change during 20Y1?
Fair market value change due to time _______________________ Increase or Decrease Fair market value change due to rate _______________________ Increase or Decrease
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