Question

Card Corp. purchased bonds at a discount of $49,000. The bonds were classified as available for sale. Subsequently, Card sold these bonds at a premium of $12,000. During the period that Card held this investment, amortization of the discount amounted to $19,000. What amount should Card report as gain on the sale of bonds?

Answer 1

The amount that the card should report as gain on sale of bonds $42000.

Step-by-step explanation:

carrying cost = 49000 - 19000= 30000

amount should card report as gain on sale of bond = cost of bond + premium price - (cost - carrying value cost )

amount card report as gain = 49000 + 12000 - ( 49000 - 30000)

= 42000

Therefore, the amount that the card should report as gain on sale of bonds $42000.