Answer:
Coronado Company
The amount of gain or loss that Coronado would report on its 2018 income statement is:
= $13,200.
Explanation:
a) Data and Calculations:
Bonds proceeds = $209,000
Bonds face value = 220,000
Bonds Discounts = $11,000
Period of bonds = 10 years
Straight-line amortization = $1,100 annually
Interest payment = annually
Coupon rate rate = 5%
Fair value on January 1, 2017 = $210,100 ($209,000 + $1,100)
Fair value on January 1, 2018 = $211,200 ($210,100 + $1,100)
Call price = 102
Total call value (cash payment) = $224,400 ($220,000 * 102/100)
Loss to report on its 2018 income statement = $13,200 ($224,400 - $209,000 - $2,200)
