Question
On December 31, 2019, Pluto Corp. acquired $500,000 of 8% bonds of Saturn Ltd., at a price to yield 6%. The bonds mature on December
On December 31, 2019, Pluto Corp. acquired $500,000 of 8% bonds of Saturn Ltd., at a price to yield 6%. The bonds mature on December 31, 2024, with interest payable each June 30 and December 31. Pluto follows IFRS and uses the FVNI model for this investment. On December 31, 2020, the bonds are selling at a price to yield 5.6%.
Required
Prepare the following four journal entries for Pluto: (15 marks)
-
Acquisition of bonds on December 31, 2019.
-
Receipt of interest on June 30, 2020.
-
Receipt of interest on December 31, 2020.
-
December 31, 2020, revaluation entry.
Round all values to the nearest dollar.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started