Question
On 1 January 20X2, Speedy Company purchased $3,000,000 of Wind Corp,3 % of Wind bonds, classified as an FVOCL bond investment for $2,737,438. The bonds
On 1 January 20X2, Speedy Company purchased $3,000,000 of Wind Corp,3 % of Wind bonds, classified as an FVOCL bond investment for $2,737,438. The bonds pay semi-annual interest each 30 June and 31 December. The market interest rate was 5 % on the date of purchase. The bonds mature on 31 December 20X6. At the end of 20X2, the bonds had a fair value of $2,900,000. On 1 July 20X3, Speedy sold the bonds for $2,950,000.
1. Construct a table that shows interest revenue by Speedy for the first three interest periods. Use the effective-interest method.
2. Give entries for the first year assuming that the investment is classified as FVOCI-Bond.
3. Give entries for the sale of the investment in 20X3.
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