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Chapter 13: 13IFRS (page 658)

Assume the same information as in IFRS 17-12 except that Roosevelt has an active trading strategy for these bonds.

The fair value of the bonds at December 31 of each end-year is as follows.

2017 \(534,200 2020 \)517,000

2018 \(515,000 2021 \)500,000

2019 $513,000

Instructions

(a) Pepare the journal entry at the date of the bond purchase.

(b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2017.

(c) prepare the journal entry to record the recognition of fair value for 2018.

Short Answer

Expert verified

Debt investment debited and cash credited by $537,907.40. Cash credited by $53,790.74 and interest revenue credited by $53,790.40 . The unrealised loss is $22,907.40 .

Step by step solution

01

Entry for the purchase of the bond

Date

Particulars

Debit

Credit



Debt Investment

$537,907.40


Cash

$537,907.40

(Being entry for the purchase of debt investment)

02

Entry for interest revenue

Date

Particulars

Debit

Credit

December31,

2017

Cash

$53.790.74

Interest Revenue

$53,790.74

(Being entry for the interest revenue)

$53,169.81

December 31,

2017

Unrealised Holding Gain or Loss-Loss

$3,707.40


Fair Value Adjustment
$3,707.40

(Being entry for fair value adjustment)

03

Entry for fair value adjustment

Date ParticularsDebitCredit
December 31,
2018		Unrealised Holding Gain or Loss-Loss$22,907.40

Fair Value Adjustment
$22,907.40

(Being entry for the fair value adjustment)

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Most popular questions from this chapter

Discuss the accounting treatment or disclosure that should be accorded a declared but unpaid cash dividend, an accumulated but undeclared dividend on cumulative preferred stock, and a stock dividend distributable.

In determining the amount of a provision, a company using IFRS should generally measure:

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