Question
Financial assets measured at FVOCI 14. On January1, 20x1, ABC Co. acquired 10%, $1,000,000 bonds for $ 827,135. The bonds mature on December 31, 20x3
Financial assets measured at FVOCI
14. On January1, 20x1, ABC Co. acquired 10%, $1,000,000 bonds for $ 827,135. The bonds
mature on December 31, 20x3 and pay annual interest every December 31. ABC Co. incurred transaction costs $80,000 on the acquisition. The effective interest rate adjusted for the effect of the transaction costs is 14%. The bonds are to be held under a "hold to collect and sell" business model. Information on fair values is as follows:
December 31, 20x1 .............................. 98
December 31, 20x2 .............................. 102
December 31, 20x3 .............................. 100
Requirements: journal entries in 20x1 and 20x2
15. Use the facts in problem #14 but assume the bonds were sold for $900,000 on July 1, 20x2.
Requirements: Provide the entries on the date of sale.
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