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29 April, 19:53

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?

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  1. 29 April, 19:57
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    The amount that the card should report as gain on sale of bonds $42000.

    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.
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