A company purchased bonds on July 1, 2021, for $94,352. This price represents a market rate of 6% on bonds that have a face amount of $100,000, have a stated rate of 5%, pay semiannual interest, and mature in 7 years. As of December 31, 2021, the fair value of the bonds has increased to $95,000. Assuming the investment is classified as available-for-sale securities, calculate the unrealized holding gain or loss recognized in the income statement in 2021.
A. $317 gain.
B. $5,000 loss.
C. $648 gain.
D. No gain or loss is recognized in the income statement.
Answer: D
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