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On July 1, 20X1, Hathaway Inc. purchased a $100,000, five-year, 6% bond when the market rate of interest was 7%.
On July 1, 20X1, Hathaway Inc. purchased a $100,000, five-year, 6% bond when the market rate of interest was 7%.
Interest was payable semi-annually on June 30 and December 31. The price paid for the bond was $95,842. Hathaway has a December 31 year end and reports its financial results in accordance with IFRS. Hathaway elects to classify this investment at FVPL. On December 31, 20X1, the bond was actively trading for $96,900.
How much income will Hathaway recognize on its financial statement for the year ended December 31, 20X1, relating to this investment?
