Question

On January 1, 2014, Morrill, Inc., purchased at par value a bond issued by a German company for 5,000 euros. Morrill classifies this security in its available-for-sale (AFS) portfolio. On December 31, 2014, the fair value of the bond is 4,800 euros. The applicable exchange rates are:
• 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.



$1.99
Sales0
Views71
Comments0
  • CreatedSeptember 10, 2014
  • Files Included
Post your question
5000