On January 1, 2019, HL Company purchased 12% bonds having a maturity value of $300,000 for $322,744.72. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2019, and mature January 1, 2024, with interest receivable December 31 of each year. HL Company uses IFRS. The bond amortization schedule follows: Schedule of Interest Revenue and Bond Premium Amortization Effective-Interest Method 12% Bonds Sold to Yield 10% Cash Received Interest Revenue Premium Amortized Date 1/1/19 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 $36,000 36,000 36,000 36,000 36,000 $32,274.47 31,901.92 31,492.11 31,041.32 30,545.46 $3,725.53 4,098.08 4,507.89 4,958.68 5,454.54 Carrying Amount of Bonds $322,744.72 319,019.19 314,921.11 310,413.22 305,454.54 300,000.00 The fair value of the bonds at December 31 of each year-end is as follows: 2019 $320,500 2020 $309,000 Required: a. Prepare the December 31, 2019 journal entry(ies) related to the bonds, assuming the bond is classified as amortized cost (AC). (3 marks) b. Prepare the fair value adjustment journal entry(ies) at December 31, 2019 related to the bonds, assuming the bond is classified as FV-OCI. (4 marks) c. Prepare the December 31, 2019 journal entry(ies) related to the bonds, assuming the bond is classified as FV-NI. (3 marks) On January 1, 2019, HL Company purchased 12% bonds having a maturity value of $300,000 for $322,744.72. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2019, and mature January 1, 2024, with interest receivable December 31 of each year. HL Company uses IFRS. The bond amortization schedule follows: Schedule of Interest Revenue and Bond Premium Amortization Effective-Interest Method 12% Bonds Sold to Yield 10% Cash Received Interest Revenue Premium Amortized Date 1/1/19 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 $36,000 36,000 36,000 36,000 36,000 $32,274.47 31,901.92 31,492.11 31,041.32 30,545.46 $3,725.53 4,098.08 4,507.89 4,958.68 5,454.54 Carrying Amount of Bonds $322,744.72 319,019.19 314,921.11 310,413.22 305,454.54 300,000.00 The fair value of the bonds at December 31 of each year-end is as follows: 2019 $320,500 2020 $309,000 Required: a. Prepare the December 31, 2019 journal entry(ies) related to the bonds, assuming the bond is classified as amortized cost (AC). (3 marks) b. Prepare the fair value adjustment journal entry(ies) at December 31, 2019 related to the bonds, assuming the bond is classified as FV-OCI. (4 marks) c. Prepare the December 31, 2019 journal entry(ies) related to the bonds, assuming the bond is classified as FV-NI
