On January 1, 2011, Tiamund Corp. sold at 103, 100 of its $1,000 face value, 5-year, 9%, non-convertible, retractable bonds. The retraction feature allows the holder to redeem the bonds at an amount equal to three times net income, to a maximum of $1,200 per bond. Tiamund has net income of $250, $350, and $450 for the fiscal years of December 31, 2011, 2012, and 2013, respectively. Tiamund Corp. prepares its financial statements in accordance with IFRS.
Instructions
(a) Prepare in general journal format the entry to record the issuance of the bonds.
(b) Using straight-line amortization, how much would the bond be carried at on the balance sheet for the 2011, 2012, and 2013 year ends?