1. On January 1, 2020, Willowing Birch Corporation, a company that follows IFRS, purchased newly issued bonds. The bonds matured on December 31, 2022, with semi-annual interest payments being made every June 30 and December 31. Willowing Birch had the intention and ability to hold the bonds until their maturity date. The bonds will be accounted for using the amortized cost model. Other information pertaining to Willowing Birch and its purchase of the bonds follows: 17 marks Willowing Birch's year end date Face value of bonds Stated rate of interest Market rate of interest $ October 31, 2020 1,234,000 4% 7% Required: a) Calculate the purchase price of the bonds. b) Prepare an amortization schedule for the bonds. c) Prepare any required journal entries on the books of Willowing Birch for each of the following dates: January 1, 2020 June 30, 2020 October 31, 2020 December 31, 2020 December 31, 2022 2. Manitoba Limited is a publicly-traded business with a December 31 fiscal year end. To get a better return on some of its excess cash, Manitoba purchased common shares of Northen Eats Corporation. Due to the nature of the Investment, Manitoba's management is accounting for the investment using the fair value through other comprehensive Income (FV-OCI) method. Information pertaining to the transactions that occurred with respect to this investment follows: 11 marks 120 $ 3 May 19, 2020 Number of shares purchased in Northern Eats Corporation Purchase price per share August 29, 2020 Northern Eats Corporation declares dividends. Dividends declared (per share) September 13, 2020 Northern Eats Corporation pays dividends declared 15 days ago 0.18 $ 8 December 31, 2020 The Northern Eats Corporation common shares were trading at the following price per share: 7 July 14,2021 Manitoba sold the shares in Northern Eats at the following $ price per share Required: Prepare journal entries to record each of the above transactions on the books of Manitoba Limited laranpreet Smy... 3. On January 1, 2020, Two Rock Corporation purchased some of the outstanding voting shares of Open Mine arks Corporation. At the time of purchase, Open Mine's assets were undervalued in its financial statements. Both companies had a December 31 year end. Other information pertaining to this investment follows: 30% Percentage of outstanding voting shares purchased by Two Rock in Open Mine 2,061,881 5,507,849 10 Price paid by Two Rock Corporation to purchase the voting shares of Open Mine Corporation $ Book value of Open Mine Corporation's net assets on January 1, 2020 $ Remaining useful life of Open Mine's property, plant, and equipment (in years) Net income for Open Mine Corporation for the 2020 year Fair value of Two Rock's Investment in shares of Open Mine at December 31, 2020 Total amount of cash dividend declared and paid by Open Mine on January 10, 2021 $ $ $ 502,780 2,275,978 96,000 Required: Prepare the journal entries on the books of Two Rock Corporation to record the transactions listed above. Assume that the investment gives Two Rock significant influence over Open Mine. Also assume that the entire amount paid by Two Rock in excess of the book value of the investment can be attributed to the undervaluation of property, plant, and equipment. 4. Champ Enterprises, a public company following IFRS, purchased the bonds of Oatty Corporation on January 1, works 2021. Interest is payable on July 1 and January 1 of each year. Other information pertaining to this investment follows: Face value of bonds Stated interest rate Market rate of interest at time bonds were purchased Fair value of bond investment at December 31, 2021 Maturity date of bond 103,000 8% 5% 111,273 2028 $ January 1. Required: Prepare journal entries for Champ's investments for the year ending December 31, 2021, assuming that the fair value through net income (FV.NI) method is used. 1. On January 1, 2020, Willowing Birch Corporation, a company that follows IFRS, purchased newly issued bonds. The bonds matured on December 31, 2022, with semi-annual interest payments being made every June 30 and December 31. Willowing Birch had the intention and ability to hold the bonds until their maturity date. The bonds will be accounted for using the amortized cost model. Other information pertaining to Willowing Birch and its purchase of the bonds follows: 17 marks Willowing Birch's year end date Face value of bonds Stated rate of interest Market rate of interest $ October 31, 2020 1,234,000 4% 7% Required: a) Calculate the purchase price of the bonds. b) Prepare an amortization schedule for the bonds. c) Prepare any required journal entries on the books of Willowing Birch for each of the following dates: January 1, 2020 June 30, 2020 October 31, 2020 December 31, 2020 December 31, 2022 2. Manitoba Limited is a publicly-traded business with a December 31 fiscal year end. To get a better return on some of its excess cash, Manitoba purchased common shares of Northen Eats Corporation. Due to the nature of the Investment, Manitoba's management is accounting for the investment using the fair value through other comprehensive Income (FV-OCI) method. Information pertaining to the transactions that occurred with respect to this investment follows: 11 marks 120 $ 3 May 19, 2020 Number of shares purchased in Northern Eats Corporation Purchase price per share August 29, 2020 Northern Eats Corporation declares dividends. Dividends declared (per share) September 13, 2020 Northern Eats Corporation pays dividends declared 15 days ago 0.18 $ 8 December 31, 2020 The Northern Eats Corporation common shares were trading at the following price per share: 7 July 14,2021 Manitoba sold the shares in Northern Eats at the following $ price per share Required: Prepare journal entries to record each of the above transactions on the books of Manitoba Limited laranpreet Smy... 3. On January 1, 2020, Two Rock Corporation purchased some of the outstanding voting shares of Open Mine arks Corporation. At the time of purchase, Open Mine's assets were undervalued in its financial statements. Both companies had a December 31 year end. Other information pertaining to this investment follows: 30% Percentage of outstanding voting shares purchased by Two Rock in Open Mine 2,061,881 5,507,849 10 Price paid by Two Rock Corporation to purchase the voting shares of Open Mine Corporation $ Book value of Open Mine Corporation's net assets on January 1, 2020 $ Remaining useful life of Open Mine's property, plant, and equipment (in years) Net income for Open Mine Corporation for the 2020 year Fair value of Two Rock's Investment in shares of Open Mine at December 31, 2020 Total amount of cash dividend declared and paid by Open Mine on January 10, 2021 $ $ $ 502,780 2,275,978 96,000 Required: Prepare the journal entries on the books of Two Rock Corporation to record the transactions listed above. Assume that the investment gives Two Rock significant influence over Open Mine. Also assume that the entire amount paid by Two Rock in excess of the book value of the investment can be attributed to the undervaluation of property, plant, and equipment. 4. Champ Enterprises, a public company following IFRS, purchased the bonds of Oatty Corporation on January 1, works 2021. Interest is payable on July 1 and January 1 of each year. Other information pertaining to this investment follows: Face value of bonds Stated interest rate Market rate of interest at time bonds were purchased Fair value of bond investment at December 31, 2021 Maturity date of bond 103,000 8% 5% 111,273 2028 $ January 1. Required: Prepare journal entries for Champ's investments for the year ending December 31, 2021, assuming that the fair value through net income (FV.NI) method is used
