Question
Metlock Incorporated issued $0.81 million of 7.5%, 10-year bonds on July 1, 2019, at face value. Interest is payable each December 31. The company has
Metlock Incorporated issued $0.81 million of 7.5%, 10-year bonds on July 1, 2019, at face value. Interest is payable each December 31. The company has chosen to apply the fair value option in accounting for the bonds. A risk assessment at December 31, 2020, shows that Metlocks credit risk has increased, and as a result of the increased credit risk, the fair value of the bonds is $729,000 on that date.
a. Prepare the companys journal entries on December 31, 2020, if Metlock follows ASPE.
b. Prepare the companys journal entries on December 31, 2020, if Metlock follows IFRS 9
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