The

PlaidPlaid

Company acquired a

$ 6$6

million face value bond that has

aa

7 %7%

coupon rate (pays interest annually on December 31) on January 1,

20172017.

The bond matures on December 31,

20222022.

On January 1,

20172017,

the market yield for bonds of equivalent risk and maturity was

5 %5%.

a.

How much did

PlaidPlaid

pay for this bond on January 1,

20172017?

b.

On December 31,

20172017,

the market yield for bonds of equivalent risk and maturity is

66%.

What would be the market value of this bond on December 31, immediately after the coupon payment on that date?

c.

On December 31,

20182018,

the market yield for bonds of equivalent risk and maturity is

7 %7%.

What would be the market value of this bond on December 31, immediately after the coupon payment on that date?

d.

Assume each of three scenarios: the bond is to be (i) amortized cost, (ii) FVOCI, or (iii) FVPL:

times	How much would the balance sheet value of this bond be on December 31, 20172017, and December 31, 20182018?
times	How much income would be reported in 20172017 and 20182018 for this bond?
times	How much would OCI and accumulated OCI be for fiscal years 20172017 and 20182018?