On Jan $1,2021,$ Martinez Ltd$.$ paid $$303,380\mathrm{.}04$ for $12\%$ bonds of Variation Ltd$.$ with a maturity value of $$282,000.$ The bonds provide the bondholders with a $10\%$ yield. They are dated Jan $1,2021,$ mature on Jan $1,2026,$ and pay interest each Dec $31.$ Martinez acquired the bond investment as part of its portfolio of trading securities and it accounts for the bonds at FV$-$NI$,$ following IFRS. At Dec $31,2021,$ Martinez's year end, the bonds had a fair value of $$301,500\mathrm{.}00.$

During $2022,$ the economic outlook related to Variation's primary business took a major downturn, so that Variation's debt was downgraded. By the end of $2022,$ the bonds were priced at $85\mathrm{.}5,$ and at Dec $31,2023,$ they were selling in the market at $87.$ Conditions reversed in $2024$ and the outlook for Variation significantly improved, leaving its bonds with a fair value of $99\mathrm{.}5$ at

Dec $31,2024.$

Bond Amortization Table

Cash Received Interest Income Amortization Carrying Amount

$303,380\mathrm{.}04$

$33,840\mathrm{.}0030,338\mathrm{.}003,502\mathrm{.}00299,878\mathrm{.}04$

$33,840\mathrm{.}0029,987\mathrm{.}803,852\mathrm{.}20296,025\mathrm{.}84$

$33,840\mathrm{.}0029,602\mathrm{.}584,237\mathrm{.}42291,788\mathrm{.}42$

$33,840\mathrm{.}0029,178\mathrm{.}844,661\mathrm{.}16287,127\mathrm{.}26$

Prepare all entries for $2022,$ including recognition of impairment in value if necessary, and for $2023$

Date Account Title Debit Credit

Dec $31/2022$

$($To record collection of Interest$)$

$($To record fair value adjustment$)$

Dec $31/2023$

$($To record interest income$)$

$($To record fair value adjustment$)$