Interest revenue on bonds is reported as a. part of operating income b. an addition to the investment in bonds account c. part of other income d. part of comprehensive income but not as part of net income

Question

Ean Serrano

Business

18 February, 18:58

Interest revenue on bonds is reported as a. part of operating income b. an addition to the investment in bonds account c. part of other income d. part of comprehensive income but not as part of net income

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Cristofer Eaton · Answer 1

as part of other income.

Explanation:

A bond's interest income is obtained by multiplying the carrying amount and the market interest rate. Bonds pay interest to the bondholder and when the security is mature it pays off the principal invested. Interest payments are not fixed but rather vary with level of earnings of the company.

Interest revenue on bonds is considered as part of other income because it is income realised from non operating activities, so it cannot be classified as operating income.