AB Company invested in the following sukuk issued by the following companies: Cinetron Inc. (Musharaka Sukuk) LimaTenzing Co. (Ijarah Sukuk) Acquisition date 1 January 2014 1 January 2014 Types Held-to-maturity Held-to-maturity Acquisition price per unit $15 $12 Quantity 700,000 units 1,500,000 units Maturity date 31 December 2020 31 Dec. 2019 Required:

Prepare journal entries to recognise the investment in sukuk in accordance with the requirements of AAOIFI FAS 17. The profit realised for sukuk invested in Lima Tenzing Co. on December 31, 2019, is $3 per unit. Prepare the Investment in Fair Value Reserve account as at December 31, 2019.

ARAB Islamic bank has the following investments in sukuk: Investments January 1, 2019, acquisition cost $ December 31, 2019, fair value $ Sukuk I (held to maturity) maturity date Dec. 31, 2020 120,000 120,000 Sukuk II (held to maturity) maturity date Dec. 31, 2019 200,000 300,000 Sukuk III (held for trading) 250,000 265,000 Sukuk IV (available for sale) 2,000,000 2,750,000

Additional information:

Both Sukuk I and II pay an annual return of 5%. This income was not received by the bank at year-end.

For Sukuk III and IV, the bank received income as follows: Sukuk III (held for trading) $25,000 Sukuk IV (available for sale) $40,000

Required:

Explain clearly what is meant by the terms held to maturity, available for sale, and held for trading. Following the rules set out in FAS No. 17, record the journal entries for the sukuk held by Arab Islamic Bank during 2019.