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On January 2, Year 4, Early Co. purchased as a short-term investment a $1 million face amount Thomas Co. 8% bond for $910,000 to yield
| On January 2, Year 4, Early Co. purchased as a short-term investment a $1 million face amount Thomas Co. 8% bond for $910,000 to yield 10%. The bonds mature on January 1, Year 11, and pay interest annually on January 1. On December 31, Year 4, the bonds had a fair value of $945,000. On February 13, Year 5, Early sold the bonds for $920,000. In its December 31, Year 4, income statement, what amount should Early report in earnings as a gain or loss on the bond, if it elected the fair value option (FVO) on January 2, Year 4? | |
| A. | $0 |
| B. | $24,000 |
| C. | $(1,000) |
| D. | $35,000 |
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