QUESTION $2$

Entity $A$ is a furniture manufacturer in Hong Kong which commenced its business more than forty years ago.

On $1$ January $2021,$ Entity A bought a $3\mathrm{.}85\%$ bond for $$3,000,000.$ The bond price was $$3,367,272$ and the transaction cost was $$19,900$ respectively. Entity

A paid the amounts to the issuer by a bank cheque. Fixed interest is received in arrears. The bond will be redeemed at a $25\%$ premium on $31$December

The bond is expected to hold to maturity. The fair value option was not adopted at the initial recognition.

The effective interest rate is $6\mathrm{.}75\%.$ The market environment is assumed credit risk$-$free.

On $31$ Dec $2022,$ due to the cash shortage, Entity A did not prefer to hold the bond until maturity and only preferred to short$-$sell it as soon as possible.

On $15$ May $2023,$ Entity A decided to sell the bond to an independent third party for $$3,400,000$ and the contract was arranged to be signed on $31$ July $2023.$

However, the buyer did not appear to sign the contract on that day.

Entity A was continuously seeking other buyers. Eventually, Entity A could not successfully sell the bond to others until the maturity date.

The fair values of the bond were as follows:

The end of the reporting period is $31$ December.

REQUIRED:

Provide journal entries for Entity A from $1$ January $2021$ to $31$ December $2023$ in accordance with relevant accounting standards.

ACCOUNTS FOR INPUT:

$|$ Financial asset $($Amortised Cost$)|$ Financial asset $($FVTPL$)|$ Financial asset $($FVTOCI$)|$

$|$ Financial liability $|$ Equity instrument $|$ Transaction cost $|$ Bank $|$ Loss allowance $|$ Impairment loss $|$ Reversal of impairment loss $|$

$|$ Gain on remeasurement $($P$/$L$)|$ Loss on remeasurement $(\frac{P}{L})|$ Gain on remeasurement $(OCl)|$ Loss on remeasurement $($OCl$)|$

$|$ Payable $|$ Receivable $|$ Other income $|$ Other expense $|$ Reclassification $($P$/$L$)|$ Reclassification $($OCl$)|$

$|$ Interest expense $|$ Interest revenue $|$ Loss on disposal $|$ Gain on disposal $|$ Retained earnings $|$ No entry $|$

ANSWERS:

Journal Entries: