On February 1, 20X2, Flamingo Financial Incorporated (Flamingo) purchased Nighthawk Corporation (Nighthawk) 12% bonds, with par value of $200,000. at 106.5 plus accrued interest to yield 10%, Interest on the Nighthawk bonds is payable April 1 and October 1 The Nighthawk bonds were priced in the open market at 103.8 on December 31, 20X2 Both Flamingo and Nighthawk are public companies with shares actively trading on the TSX For financial reporting purposes, Flamingo's management decided to opt for early adoption of IFRS 9: Financial Instruments three vears ago. Flamingo has a December 31 year end Required: Prepare all 20X2 journal entries related to the above investment, and show the effects on Flamingo Financial Incorporated's balance sheet and income statement, assuming that it is appropriate for Flamingo to account for the Nighthawk bonds as an investment measured at (i) amortised cost (ii) fair value through profit and loss (FV-NI); further assume that Flamingo reports interest income separately from gains and losses on the investment. (iii) fair value through profit and loss (FV-NI); further assume that Flamingo does not report interest income separately from gains and losses on the investment. (iv) fair value through other comprehensive income (FV-oCI) On February 1, 20X2, Flamingo Financial Incorporated (Flamingo) purchased Nighthawk Corporation (Nighthawk) 12% bonds, with par value of $200,000. at 106.5 plus accrued interest to yield 10%, Interest on the Nighthawk bonds is payable April 1 and October 1 The Nighthawk bonds were priced in the open market at 103.8 on December 31, 20X2 Both Flamingo and Nighthawk are public companies with shares actively trading on the TSX For financial reporting purposes, Flamingo's management decided to opt for early adoption of IFRS 9: Financial Instruments three vears ago. Flamingo has a December 31 year end Required: Prepare all 20X2 journal entries related to the above investment, and show the effects on Flamingo Financial Incorporated's balance sheet and income statement, assuming that it is appropriate for Flamingo to account for the Nighthawk bonds as an investment measured at (i) amortised cost (ii) fair value through profit and loss (FV-NI); further assume that Flamingo reports interest income separately from gains and losses on the investment. (iii) fair value through profit and loss (FV-NI); further assume that Flamingo does not report interest income separately from gains and losses on the investment. (iv) fair value through other comprehensive income (FV-oCI)
