Question
Question 2: On 1 January 2017, XYZ Ltd. acquires bonds carrying a stated interest rate of 13% that will be held to maturity with the
Question 2:
On 1 January 2017, XYZ Ltd. acquires bonds carrying a stated interest rate of 13% that will be held to maturity with the face value of $200,000 for $204,917.42. The interest of bonds are payable semiannually on June 30 and December 31. The effective interest rate is 12%. The maturity date of the bonds is 31 December 2019.
a. Work on the amortization schedule of the bond investment.
Date | Gross interest | Effective interest income | Premium amortised | Amortised Cost |
1.1.17 |
|
|
|
|
30.6.17 |
|
|
|
|
31.12.17 |
|
|
|
|
30.6.18 |
|
|
|
|
31.12.18 |
|
|
|
|
30.6.19 |
|
|
|
|
31.12.19 |
|
|
|
|
b. The bond investment is classified as financial assets at amortised cost. On 30 June, 2018 after receiving the semiannual payment, the bond investment is sold for $202,000. Provide accounting entries related to the bond investment in years 2017 and 2018.
c. The bond investment is classified as FVTPL. The fair value of the bond investment is $210,000 on 31 December 2017. On 30 June, 2018 after receiving the semiannual payment, the bond investment is sold for $202,000. Provide accounting entries related to the bond investment in years 2017 and 2018.
d. The bond investment is classified as FVTOCI. The fair value of the bond investment is $210,000 on 31 December 2017. On 30 June, 2018 after receiving the semiannual payment, the bond investment is sold for $202,000. Provide accounting entries related to the bond investment in years 2017 and 2018.
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