Question
During the year 2016, Al-Luqta Company decided to purchase bonds of companies listed in the stock market, with the aim of investing. On July 1,
During the year 2016, Al-Luqta Company decided to purchase bonds of companies listed in the stock market, with the aim of investing. On July 1, 2016, Al-Laqta Company purchased bonds with a nominal value of $850,400 at an interest rate of 10%. The market value of those bonds on December 31, 2016, was (End of the companys fiscal year) an amount of $862,200.
Required: Prepare an appropriate adjustment entry on 31st December 2016 which reflects the change in the fair value for those bonds, assuming that those bonds are designated as
a. Securities for the purpose of trading.
b. Securities available for sale.
c. Debt securities held to maturity.
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