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Please make the response detailed, explanative and easy to read Adjusting Bonds Payable Under the Fair Value Option Josie Corporation issued 10-year, 8% interest-bearing bonds
Please make the response detailed, explanative and easy to read
Adjusting Bonds Payable Under the Fair Value Option
Josie Corporation issued 10-year, 8% interest-bearing bonds payable at face value for $10,000 on January 1, 2020. At that time, Josie Corporation elected to account for the bonds payable using the fair value option method. At December 31, 2020, the fair value of the bonds payable was $9,900 due to an increase in Josie Corporations borrowing rate because of general market risk.
a. Prepare the journal entry to adjust the bonds payable under the fair value option method on December 31, 2020. b. How would your answer to (a) change if the decrease in the fair value of bonds payable was instead due to an increase in Josie Corporation's borrowing rate due to a decline in corporate liquidity? Dr. Cr. 0 x 0 Date Account Name a. Dec. 31, 2020 Fair Value Adjustment-Bonds Payable Unrealized Gain or Loss-Income b. Dec. 31, 2020 Fair Value Adjustment-Bonds Payable Unrealized Gain or Loss-OCI - 0 0 x > OX 0 0 > 0 xStep by Step Solution
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