On January 1, 2014, Morrill, Inc., purchased at par value a bond issued by a German company
Question:
• January 1, 2014: $1.30 = 1 euro
• December 31, 2014: $1.40 = 1 euro
Required:
1. Prepare the January 1, 2014, and December 31, 2014, journal entries, assuming Morrill uses U.S. GAAP to account for the bond investment. Ignore fair value adjustments for other securities in Morrill’s AFS portfolio.
2. Repeat requirement 1 assuming Morrill uses IFRS.
3. Compare the effect on 2014 income and other comprehensive income (OCI) for U.S. GAAP and IFRS.
GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
Question Posted: