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FinanceQ&A LibraryOn July 1, Year 1, XYZ Corporation purchased as a long-term investment a $2 million face amount ABC Co. 6% bond for $2,025,000 plus accrued interest to yield 5.75%. On December 31, Year 1, the bonds had a fair value of $1,850,000. What amount of income should XYZ report on its income statement for the year ended December 31, Year 1, related to this bond investment if it is classified as a held-to-maturity security? a. $120,000 b. $116,438 c. $121,500 d. $115,000Start your trial now! First week only $4.99!*arrow_forward*

Question

On July 1, Year 1, XYZ Corporation purchased as a long-term investment a $2 million face amount

ABC Co. 6% bond for $2,025,000 plus accrued interest to yield 5.75%. On December 31, Year 1,

the bonds had a fair value of $1,850,000. What amount of income should XYZ report on its income

statement for the year ended December 31, Year 1, related to this bond investment if it is classified

as a held-to-maturity security?

a. $120,000

b. $116,438

c. $121,500

d. $115,000

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