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.