Question
On January 1, 2020 Alpha Ltd. invested $1,812,298 in bonds with a face value of $2,000,000, with a nominal interest rate of 6%, and semi-annual
On January 1, 2020 Alpha Ltd. invested $1,812,298 in bonds with a face value of $2,000,000, with a nominal interest rate of 6%, and semi-annual interest payments on June 30 and December 31 each year. The market rate of interest was 8% on January 1, 2020 and the bonds were set to mature in 6 years. The bonds had a market value of $1,980,000 on December 31, 2020. Alpha Ltd. uses IFRS.
Required
a) Using the Amortized Cost model, prepare all journal entries required on December 31, 2020.
b) Using the Fair Value through Net Income model, prepare all journal entries required on December 31, 2020.
Step by Step Solution
3.52 Rating (152 Votes )
There are 3 Steps involved in it
Step: 1
a Under the amortized cost method the debt investment 3T is initially rec...
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
Intermediate Accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson
6th edition
978-0077328894, 71313974, 9780077395810, 77328892, 9780071313971, 77395816, 978-0077400163
