On 1 January 20X2, Speedy Company purchased $3,000,000 of Wind Corp. 3% bonds, classified as an FVOCI-Bond

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On 1 January 20X2, Speedy Company purchased $3,000,000 of Wind Corp. 3% bonds, classified as an FVOCI-Bond investment for $2,737,438. The bonds pay semi-annual interest each 30 June and 31 December. The market interest rate was 5% on the date of purchase. The bonds mature on 31 December 20X6. At the end of 20X2, the bonds had a fair value of $2,900,000. On 1 July 20X3, Speedy sold the bonds for $2,950,000.


Required:

1. Construct a table that shows interest revenue reported by Speedy for the first three interest periods. Use the effective-interest method.

2. Give entries for the first year assuming that the investment is classified as FVOCI-Bond.

3. Give entries for the sale of the investment in 20X3.

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Related Book For  book-img-for-question

Intermediate Accounting Volume 1

ISBN: 9781260306743

7th Edition

Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod Dick

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