On 1 January 2016, Entity A invested in a bond Its face value is $2,000,000 and it pays fixed interest of 7 25 for the first two years, then 9 25 fixed interest for the last two years The fair value of the bond is $1,915,619 and the transaction cost for purchasing the bond is $40,380 Entity A made the payment to the issuer for the purchasing of the bond by a cheque It was planned to hold until maturity Fair value option in measurement was not adopted Interest is paid in arrears annually The bond will be redeemed at a premium of 15 after 4 years The effective rate for this bond is 12 00 The 12 month expected credit loss was estimated at $19,500 On 31 December 2016, there was no significant change in credit risk The 12 month expected credit loss was estimated at $21,600 On 31 December 2017, it became apparent that the issuer suffered financial difficulties After communicating with the issuer, it was estimated that Entity A will only receive expected contractual cash flows of 60 fixed interests and 75 redemption value in the future The bond has become credit impaired On 31 December 2018 and 31 December 2019, there was NO further deterioration in credit risk The expected contractual cash flows of fixed interests and redemption value in the Year 2018 and Year 2019 were well received from the issuer on time Entity A believed that no further credit loss would be applied in these 2 years The end of the reporting period is 31 December REQUIRED Provide journal entries for Entity A from 1 January 2019 to 31 December 2019 in accordance with relevant accounting standards ACCOUNT NAMES FOR INPUT Financial asset Financial liability Equity instrument Transaction cost Bank Loss allowance Gain on remeasurement Loss on remeasurement Payable Receivable Impairment loss Other income Other expense Interest expense Interest revenue Loss on disposal Gain on disposal Retained earnings No entry ANSWERS Journal Entries Date Account Name Debit ($) Credit ($) Hints For Sequence 1 Jan 16 Judge Dr Cr side Judge Dr Cr side Judge Dr Cr side Judge Dr Cr side 31 Dec 16 Judge Dr Cr side Judge Dr Cr side Judge Dr Cr side Judge Dr Cr side Judge Dr Cr side 31 Dec 17 Judge Dr Cr side Judge Dr Cr side Judge Dr Cr side Judge Dr Cr side Judge Dr Cr side Judge Dr Cr side 31 Mar 18 Judge Dr Cr side Judge Dr Cr side Judge Dr Cr side Judge Dr Cr side 31 Dec 19 Judge Dr Cr side Judge Dr Cr side Judge Dr Cr side Judge Dr Cr side Basically, the journal entries are formatted as a Pair which started with Debit and ended with Credit If the format of the required journal entries is more than a Pair, the correct side of the entry entries between the starting Debit and the ending Credit should be judged by students and enter the Numerical Value only Follow the date, time and sequence logically to make journal entries unless they are NOT clear Hints of the transaction sequence may be provided if necessary The wrong sequence of journal entry answers gets NO marks If NO entry is required, enter No entry for Account Name and 0 for the Amount Account Names are already provided for selection Copy and paste the Account Names are suggested Wrong spelling of them gets NO marks Only when the sequence of some entries is NOT clear, you may use the below rules If the entries are related to property, i e Land and Building, the sequence should be Land first and Building second If the entries are related to partial payment, i e Bank and Receivable or Payable, the sequence should be Bank first and Receivable or Payable second respectively If the year ended entries are related to Interest adjustment and Depreciation adjustment, the sequence should be Interest adjustment first and Depreciation adjustment second If the year ended entries are related to Depreciation adjustment and Realisation adjustment, the sequence should be Depreciation adjustment first and Realisation adjustment second For entering a list of assets liabilities on Debit or Credit Side, the sequence is as same as the sequence of the list of assets liabilities in the question

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On 1 January 2016, Entity A invested in a bond. Its face value is $2,000,000 and it pays fixed interest of 7.25% for the first

On 1 January 2016, Entity A invested in a bond. Its face value is $2,000,000 and it pays fixed interest of 7.25% for the first two years, then 9.25% fixed interest for the last two years. The fair value of the bond is $1,915,619 and the transaction cost for purchasing the bond is $40,380. Entity A made the payment to the issuer for the purchasing of the bond by a cheque. It was planned to hold until maturity. Fair value option in measurement was not adopted. Interest is paid in arrears annually. The bond will be redeemed at a premium of 15% after 4 years. The effective rate for this bond is 12.00%. The 12-month expected credit loss was estimated at $19,500.

On 31 December 2016, there was no significant change in credit risk. The 12-month expected credit loss was estimated at $21,600.

On 31 December 2017, it became apparent that the issuer suffered financial difficulties. After communicating with the issuer, it was estimated that Entity A will only receive expected contractual cash flows of 60% fixed interests and 75% redemption value in the future. The bond has become credit-impaired.

On 31 December 2018 and 31 December 2019, there was NO further deterioration in credit risk. The expected contractual cash flows of fixed interests and redemption value in the Year 2018 and Year 2019 were well received from the issuer on time. Entity A believed that no further credit loss would be applied in these 2 years.

The end of the reporting period is 31 December.

REQUIRED:

Provide journal entries for Entity A from 1 January 2019 to 31 December 2019 in accordance with relevant accounting standards.

ACCOUNT NAMES FOR INPUT:

ANSWERS:

Journal Entries:

Date	Account Name	Debit ($)	Credit ($)	Hints For Sequence
1-Jan-16
				Judge Dr/Cr side
				Judge Dr/Cr side
				Judge Dr/Cr side
				Judge Dr/Cr side
31-Dec-16
				Judge Dr/Cr side
				Judge Dr/Cr side
				Judge Dr/Cr side
				Judge Dr/Cr side
				Judge Dr/Cr side
31-Dec-17
				Judge Dr/Cr side
				Judge Dr/Cr side
				Judge Dr/Cr side
				Judge Dr/Cr side
				Judge Dr/Cr side
				Judge Dr/Cr side
31-Mar-18
				Judge Dr/Cr side
				Judge Dr/Cr side
				Judge Dr/Cr side
				Judge Dr/Cr side
31-Dec-19
				Judge Dr/Cr side
				Judge Dr/Cr side
				Judge Dr/Cr side
				Judge Dr/Cr side

Basically, the journal entries are formatted as a Pair which started with Debit and ended with Credit.
If the format of the required journal entries is more than a Pair, the correct side of the entry/entries between the starting Debit and the ending Credit should be judged by students and enter the Numerical Value only.
Follow the date, time and sequence logically to make journal entries unless they are NOT clear. Hints of the transaction sequence may be provided if necessary. The wrong sequence of journal entry answers gets NO marks.
If NO entry is required, enter No entry for Account Name and 0 for the Amount.
Account Names are already provided for selection. Copy and paste the Account Names are suggested. Wrong spelling of them gets NO marks.
Only when the sequence of some entries is NOT clear, you may use the below rules:
- If the entries are related to property, i.e. Land and Building, the sequence should be Land first and Building second.
- If the entries are related to partial payment, i.e. Bank and Receivable or Payable, the sequence should be Bank first and Receivable or Payable second respectively.
- If the year-ended entries are related to Interest adjustment and Depreciation adjustment, the sequence should be Interest adjustment first and Depreciation adjustment second.
- If the year-ended entries are related to Depreciation adjustment and Realisation adjustment, the sequence should be Depreciation adjustment first and Realisation adjustment second.
- For entering a list of assets/liabilities on Debit or Credit Side, the sequence is as same as the sequence of the list of assets/liabilities in the question.