On 1 January 20X7 Bain Limited purchased government bonds for R800 000. . ...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On 1 January 20X7 Bain Limited purchased government bonds for R800 000. • • . • The face value is R840 000 and the coupon interest is 8% p.a., payable annually in arrears. The government bonds are redeemable at face value in 3 years. The effective interest rate is 9,9119% p.a. The company's intention was to hold the governmentbonds to collect contractual cash flows and the return of capital and interest • On 31 July 20X8, the company changed its business model (the new business model became effective from this date) relating to the government bonds. The fair value on this date was R925 000 and changed to R966 000 on 31 December 20X8. • Credit risk has not increased significantly since initial recognition over the 3 years and the asset was not been credit impaired at any point. • The 12 month-expected credit losses were estimated as follows: Date 1 January 20X7 31 December 20X7 31 July 20X8 31 December 20X8 12 month expected credit loss R 28 000 29 000 42 000 43 000 YOU ARE REQUIRED TO: Prepare all related journal entries in Bain Limited's general journal for the years ended 31 December 20X7, 20X8 and 20X9. The govemment bonds were reclassified from amortised cost to fair value through profit or loss. On 1 January 20X7 Bain Limited purchased government bonds for R800 000. • • . • The face value is R840 000 and the coupon interest is 8% p.a., payable annually in arrears. The government bonds are redeemable at face value in 3 years. The effective interest rate is 9,9119% p.a. The company's intention was to hold the governmentbonds to collect contractual cash flows and the return of capital and interest • On 31 July 20X8, the company changed its business model (the new business model became effective from this date) relating to the government bonds. The fair value on this date was R925 000 and changed to R966 000 on 31 December 20X8. • Credit risk has not increased significantly since initial recognition over the 3 years and the asset was not been credit impaired at any point. • The 12 month-expected credit losses were estimated as follows: Date 1 January 20X7 31 December 20X7 31 July 20X8 31 December 20X8 12 month expected credit loss R 28 000 29 000 42 000 43 000 YOU ARE REQUIRED TO: Prepare all related journal entries in Bain Limited's general journal for the years ended 31 December 20X7, 20X8 and 20X9. The govemment bonds were reclassified from amortised cost to fair value through profit or loss.
Expert Answer:
Answer rating: 100% (QA)
The detailed answer for the above question is provided below Journal Entries for the Years Ended ... View the full answer
Related Book For
Financial Accounting and Reporting
ISBN: 978-1292080505
17th edition
Authors: Barry Elliott, Jamie Elliott
Posted Date:
Students also viewed these accounting questions
-
Accounting Table 2 Contract Offers from the Orioles (All Dollar Figures are in Millions) Signing Total Offer bonus Playing salary Deferr Calculation Questions (Answer these questions on excel. Each...
-
On 1 January 20X7 Baldwin Brothers entered into a five-year lease of equipment at an annual rental of 39,000 payable in arrears. The interest rate associated with this transaction is 10% and Baldwin...
-
On 1 January 20X7 Parent Ltd acquired all the ordinary shares in Daughter Ltd for £6,000 cash. The fair value of the net assets in Daughter Ltd was their book value. Required: Prepare the...
-
Claud Chapperon is a self-employed distributor of wholesale clothing who began trading on 1 July 2012. His summarised accounts for the year to 30 June 2020 are shown below. The figures in brackets...
-
A neon sign is made of glass tubing who's inside diameter is 2.5 cm and whose length is 5.5 m. If the sign contains neon at a pressure of 1.78 torr at 35oC, how many grams of neon are in the sign?...
-
A photon has an energy E and wavelength ( before scattering from a free electron. After scattering through a 135 angle, the photon's wavelength has increased by 10.0%. Find the initial wavelength and...
-
If each point of the sample space of Figure 3.12 represents an outcome having the probability find, 32
-
In 2014, an 1874 $20 double eagle sold for $15,000. What was the rate of return on this investment?
-
On April 1, 2020, Gusto Corp. purchases a call option for $500, giving Gusto the right to purchase 1,000 shares of Delta Inc. for $30 each until December 1, 2020. Delta Stock Inc. are currently...
-
Sarah Smith is the marketing manager for Activa. She decides to run a sales promotion to boost the brand's business and is interested in evaluating the success of the promotion. The following is key...
-
You are considering two independent projects with the following cash flows. The required return for both projects is 12 %. You should accept: Year Product 1 Product 2 0 -$740,000 -$195,000 1 $280,000...
-
What are the two basic classifications under which most potential financial goals fall?
-
what is the preferred way of teaching students the rules of social interaction ?
-
Based on what you have learned about auditors, list and describe the three groups of people that conduct audits. Internal Auditors Employed by the company to provide independent and objective...
-
Can an inventor patent an invention without disclosing how to make it?
-
Depreciation is only applied against land. Depreciation is the only expense where money is not paid out. Only facilities are depreciated. Once an asset is fully depreciated, the organization should...
-
In a research report, a student is running a two-variable OLS regression to prove that Chinese firms' ROA (a traditional proxy for firm profitability) is adversely affected by CSR spending (measured...
-
In order to get an idea on current buying trends, a real estate agent collects data on 10 recent house sales in the area. Specifically, she notes the number of bedrooms in each house as follows: a....
-
At 31 October 20X9, Lytax Ltd was engaged in the following five long-term contracts. In each contract Lytax was building cold storage warehouses on five sites where the land was owned by the...
-
(i) Critically discuss the rationale for allowing businesses in the UK a choice as to which accounting standards to apply, such as IFRS for the Group accounts and FRS 102 for UK subsidiaries. (ii)...
-
Gamma is a company that manufactures power tools. Gamma was established by Mr Lee, who owns all of Gamma's shares. Mrs Lee, Mr Lee's wife, owns a controlling interest in Delta, a distributor of power...
-
Why is it said that the PSNR principle has both a right and a duty side? Which one is most relevant with respect to international environmental law?
-
What, if any, is the normative content of the concept of SD?
-
Would you consider the PSNR principle still relevant today? Why?
Study smarter with the SolutionInn App