Problem 9-3 The following amortization schedule is for Martinez Ltd.'s investment in Spangler Corp's $75,000, five-year bonds with a 7% interest rate and a 5% yield, which were purchased on December 31, 2016, for $81,494 Bond Premium Amortized Amortized Cost of Bonds Cash Interest Received Income Dec. 31, 2016 $81,494 Dec. 31, 2017$5,250 5,250 5,250 5,250 5,250 Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2020 Dec. 31, 2021 $4,075 4,016 3,954 3,889 3,821 $1,175 1,234 1,296 1,361 1,428 80,319 79,085 77,789 76,428 75,000 The following schedule presents a comparison of the amortized cost and fair value of the bonds at year end: Dec. 31, 2017 $80,319 $79,739 Dec. 31, 2018 $79,085 $81,105 Dec. 31, 2019 $77,789 $79,709 Dec. 31, 2020 $76,428 $77,513 Dec. 31, 2021 $75,000 $75,000 Amortized cost Fair value Assume that Martinez Ltd. follows IFRS 9 and reports interest income separately from other investment income, except for trading investments accounted for at FV-NI Prepare the ournal entry to record the purchase o these bonds on December 31 2016, assuming the bonds are accounted rusin t ea mortize co od ed account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Prepare the journal entry related to the bonds accounted for using the amortized cost model for 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit Dec. 31 Prepare the journal entry related to the bonds accounted for using the amortized cost model for 2019. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places, e.g.5,275.) Date Account Titles and Explanation Debit Credit Dec. 31 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Prepare the journal entry to record the purchase of these bonds, assuming they are held for trading purposes and accounted for using the FV-NI model. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to O decimal places, e.g. 5,275) Date Account Titles and Explanation Debit Credit Dec. 31 Prepare the journal entry(ies) related to the trading bonds accounted for using the FV-NI model for 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit Dec. 31 (To record interest.) Dec. 31 (To record investment income or loss.) Prepare the journal entry(ies) related to the trading bonds accounted for using the FV-NI model for 2019. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275. Date Account Titles and Explanation Debit Credit Dec. 31 (To record interest.) Dec. 31 (To record investment income or loss.)
