Question
On October 1, Qilan Ltd. purchased 7% bonds with a face value of $1,000 for trading purposes, accounting for the investment at FV-NI. The bonds
On October 1, Qilan Ltd. purchased 7% bonds with a face value of $1,000 for trading purposes, accounting for the investment at FV-NI. The bonds were priced at 1.044 to yield Qilan 6% and pay interest annually each October 1. Qilan has a December 31 year-end, and at this date, the bonds' fair value was $1,055. Assume Qilan applies IFRS and follows a policy of not reporting interest income separately from other investment income.
a. Prepare Qilan's journal entry for the purchase of the investment.
b. Prepare Qilan's journal entry for the December 31 interest accrual.
c. Prepare Qilan's journal entry for the year-end fair value adjustment.
d. Assume Qilan applies ASPE, uses the effective interest method, and follows a policy of reporting interest income separately, prepare Qilan's journal entry for the December 31 interest accrual.
e. Assuming Qilan applies ASPE, uses the effective interest method, and follows a policy of reporting interest income separately, prepare Qilan's journal entry for the year-end fair value adjustment.
DO NOT COPY FROM CHEGG OR ELSE I HAVE TO REPORT.
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