Entity A is listed in Hong Kong. It is a toy manufacturer which commenced its business more than thirty years.

On 1 July 2018, Entity A bought a $3,500,000 5.25% bond for $3,650,000. It also incurred an issue cost of $2,312. Entity A paid the bond price by a direct bank transfer on the purchase date. The issue cost was settled on 16 July 2018. Fixed interest is received in arrears. The bond will be redeemed at a premium over its face value on 30 June 2021.

Entity A intended to hold the bond until maturity. The fair value option was not elected at the initial recognition.

The fair values of the bond were as follows:

• 30 June 2019 $3,980,000
• 30 June 2020 $3,560,000
• 30 November 2020 $3,250,000
• 31 December 2020 $3,350,000
• 30 June 2021 $4,365,400

The effective interest rate is 8.25%. The market environment is stable and credit risk-free. The end of the reporting period is 30 June.

REQUIRED:

According to relevant accounting standards, prepare journal entries to recognise the transactions of Entity A from 1 July 2018 to 30 June 2021.

ACCOUNTS FOR INPUT:

| Financial asset (Amortised Cost) | Financial asset (FVTPL) | Financial asset (FVTOCI) |

| Financial liability | Equity instrument | Transaction cost | Bank | Loss allowance | Impairment loss | Reversal of impairment loss |

| Gain on remeasurement (P/L) | Loss on remeasurement (P/L) | Gain on remeasurement (OCI) | Loss on remeasurement (OCI) |

| Payable | Receivable | Other income | Other expense | Reclassification (P/L) | Reclassification (OCI) |

| Interest expense | Interest revenue | Loss on disposal | Gain on disposal | Retained earnings | No entry |

ANSWERS:

Journal Entries:

Date	Account Name	Debit ($)	Credit ($)	Hints For Sequence
1-Jul-18				-
				Not an Asset. Judge Dr/Cr. Only Enter Amount.
				Judge Dr/Cr. Only Enter Amount.
				-
16-Jul-18				-
				-
30-Jun-19				-
				Not an Income. Judge Dr/Cr. Only Enter Amount.
				-
30-Jun-20				-
				Not an Income. Judge Dr/Cr. Only Enter Amount.
				-
30-Jun-21				-
				Not an Income. Judge Dr/Cr. Only Enter Amount.
				-
30-Jun-21				-
				Judge Dr/Cr. Only Enter Amount.
				-