Case X

Company A purchased bonds with a face value of $ 500,000 and a coupon rate of 12% on January 1, 2020

Market rate is 10% at time of issue Interest is paid semi annually on June 30 and December 31

Market rate is 11% on December 31, 2020 The bonds mature on December 31, 2025

Question 1a) Using the FV OCI method under IFRS prepare journal entries for 2020

Question 1b) Using the FV -NI method under IFRS prepare journal entries for 2020

Question 2) - Assume now that the investment is sold on Dec 31/22 when market rate is 9%

Assume market was still 11% at Dec 31/21 -

Require journal entries at Dec 31/22 under FV NI and FV OCI

- Reconcile total amount inn net income for the two methods