Question
On October 1, Jones Ltd. purchased a 7% bond with a face value of $1,000 for trading purposes, accounting for the investment at fair value
On October 1, Jones Ltd. purchased a 7% bond with a face value of $1,000 for trading purposes, accounting for the investment at fair value through net income. The bond was priced at 1.023 to yield Jones 5% and pays interest annually each October 1. Jones has a December 31 year end, and at this date, the bonds fair value was $1,050. Assume Jones applies IFRS.
Instructions
a) Prepare Joness entry for the purchase of the investment.
b) Prepare Joness entry for the December 31 interest accrual.
c) (i) Prepare Joness entry for the year-end fair value adjustment. (ii) Assume Jones applies ASPE, uses the effective-interest method, and follows a policy of reporting interest income separately. Question 2: Kanes Corp provided you with the following information about its investment in Blues Inc. shares purchased May 2023, and accounted for using the FVOCI method Cost................................................................ $29,500 Fair value, December 31, 2023...................... $30,900 Fair value, December 31, 2024...................... $23,800 Fair value, December 31, 2025...................... $26,900 Instructions
a) Prepare the adjusting journal entries needed on December 31, 2023, 2024, and 2025.
b) Determine the balance in the accumulated other comprehensive income on the statement of financial position on each of December 31, 2023, 2024, and 2025.
c) Assume Kanes sold its investment in Blues Inc. on February 13, 2026, for $28,100. Prepare the journal entry(ies) needed on this date.
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