Question

Mesquite, Inc. has held-to-maturity debt securities it purchased in 20X1. At December 31, 20X2, the amortized cost basis of the securities is $220,000 and the fair value of the securities is $208,000. The present value of estimated future cash flows discounted at the original effective interest rate is $210,000. Mesquite, Inc. uses IFRS for its external reporting. What amount of loss, if any, will Mesquite, Inc. report related to these securities for 20X2

Answer 1

"$10,000" is the appropriate solution.

Step-by-step explanation:

According to the question, the values are:

Future cash flows,

= $2,10,000

Amortization Cost,

= $2,20,000

Now,

The loss amount will be:

=
`Future \ Cash \ Flows - Amortization \ Cost`

On substituting the given values, we get

=
`2,10,000 - 2,20,000`

=
`10,000`