On January $1,2021,$ Culver Ltd$.$ paid $$271,105\mathrm{.}57$ for $12\%$ bonds of Variation Ltd$.$ with a maturity value of $$252,000.$ The bonds

provide the bondholders with a $10\%$ yield. They are dated January $1,2021,$ mature on January $1,2026,$ and pay interest each

December $31.$ Culver acquired the bond investment as part of its portfolio of trading securities and it accounts for the bonds at FV$-$NI$,$

following IFRS. At December $31,2021,$ Culver's year end, the bonds had a fair value of $$269,400\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 December $31,2023,$ 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

December $31,2024.$

$($b$)$

Your answer is partially correct.

Prepare the entries to record Culver's purchase of the bonds on January $1,2021,$ the recognition of interest income and interest

received on December $31,2021,$ and the fair value adjustment required at December $31,2021.($Credit account titles are

automatically indented when the amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles

and enter O for the amounts. List all debit entries before credit entries. Round answers to $2$ decimal places, e$.$g$.52\mathrm{.}75.)$

te

$121$

$121$

Account Titles and Explanation

FV$-$NI Investments

Cash

Cash

$($To record collection of interest$)$

Debit

Credit

$271105\mathrm{.}57$