On January 1, 2018, Blue Spruce Ltd. paid $245,285.99 for 12% bonds of Variation Ltd. with...

 

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On January 1, 2018, Blue Spruce Ltd. paid $245,285.99 for 12% bonds of Variation Ltd. with a maturity value of $228,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2018, mature on January 1, 2024, and pay interest each December 31. Blue Spruce acquired the bond investment as part of its portfolio of trading securities and it accounts for the bonds at FV-NI, following IFRS. At December 31, 2018, Blue Spruce's year end, the bonds had a fair value of $243,700.00. During 2019, the economic outlook related to Variation Ltd's primary business took a major downturn, so that Variation's debt was downgraded. By the end of 2019, the bonds were priced at 85.5, and at December 31, 2020, they were selling in the market at 87. Conditions reversed in 2021 and the outlook for Variation Ltd. significantly improved, leaving its bonds with a fair value of 99.5 at December 31, 2021. Prepare a bond amortization table for the four-year period ending December 31, 2021. (Round answers to 2 decimal places, eg. 52.75.) Bond Amortization Table Cash Interest Premium Carry Date Received Income Amortization Amount c 01/01/18 12/31/18 27360 $ 24528.60 2$ 2831.40 12/31/19 27360 24245.46 3114.54 12/31/20 27360 23934.01 3425.99 12/31/21 27360 23591.41 3768.59 %24 %24 Prepare a bond amortization table for the four-year period ending December 31, 2021. (Round answers to 2 decimal places, e.g. 52.75.) Bond Amortization Table Cash Interest Premium Carrying Amount of Bonds Received Income Amortization 2$ 245285.99 $ 27360 2$ 24528.60 2831.40 242454.58 27360 24245.46 3114.54 239340.05 27360 23934.01 3425.99 235914.06 27360 23591.41 3768.59 232145.47 %24 %24 Prepare the entries to record Blue Spruce's purchase of the bonds on January 1, 2018, the recognition of interest income and interest received on December 31, 2018, and the fair value adjustment required at December 31, 2018. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 2 decimal places, eg. 52.75.) Date Account Titles and Explanation Debit Credit Jan. 1, FV-NI Investments 245285.99 2018 Cash 245285.99 Dec. 31, Cash 27360 2018 FV-NI Investments 2831.40 Interest Income 24528.60 (To record collection of interest) 1245.41 Unrealized Gain or Loss 1245.41 (To record fair value adjustment) Prepare all entries required for 2019, including recognition of the impairment in value if necessary, and for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 2 decimal places, e.g. 52.75.) Date Account Titles and Explanation Debit Credit Dec. 31, Cash 27360 2019 FV-NI Investments 3114.54 Interest Income 24245.46 (To record collection of interest) FV-NI Investments Unrealized Gain or Loss (To record fair value adjustment) Dec. 31, Cash 27360 2020 FV-NI Investments 3425.99 Interest Income 23934.011 Dec. 31, Cash 27360 2019 FV-NI Investments 3114.54 Interest Income 24245.46 (To record collection of interest) FV-NI Investments Unrealized Gain or Loss (To record fair value adjustment) Dec. 31, Cash 27360 2020 FV-NI Investments 3425.99 Interest Income 23934.011 (To record interest income) FV-NI Investments Unrealized Gain or Loss (To record fair value adjustment) Prepare all entries required for 2021, including recognition of the recovery of the impairment in value, if necessary. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 2 decimal places, e.g. 52.75.) Date Account Titles and Explanation Debit Credit Dec. 31, Cash 27360 2021 FV-NI Investments 3768.59 Interest Income 23591.41 (To record collection of interest) FV-NI Investments Unrealized Gain or Loss (To record fair value adjustment) On January 1, 2018, Blue Spruce Ltd. paid $245,285.99 for 12% bonds of Variation Ltd. with a maturity value of $228,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2018, mature on January 1, 2024, and pay interest each December 31. Blue Spruce acquired the bond investment as part of its portfolio of trading securities and it accounts for the bonds at FV-NI, following IFRS. At December 31, 2018, Blue Spruce's year end, the bonds had a fair value of $243,700.00. During 2019, the economic outlook related to Variation Ltd's primary business took a major downturn, so that Variation's debt was downgraded. By the end of 2019, the bonds were priced at 85.5, and at December 31, 2020, they were selling in the market at 87. Conditions reversed in 2021 and the outlook for Variation Ltd. significantly improved, leaving its bonds with a fair value of 99.5 at December 31, 2021. Prepare a bond amortization table for the four-year period ending December 31, 2021. (Round answers to 2 decimal places, eg. 52.75.) Bond Amortization Table Cash Interest Premium Carry Date Received Income Amortization Amount c 01/01/18 12/31/18 27360 $ 24528.60 2$ 2831.40 12/31/19 27360 24245.46 3114.54 12/31/20 27360 23934.01 3425.99 12/31/21 27360 23591.41 3768.59 %24 %24 Prepare a bond amortization table for the four-year period ending December 31, 2021. (Round answers to 2 decimal places, e.g. 52.75.) Bond Amortization Table Cash Interest Premium Carrying Amount of Bonds Received Income Amortization 2$ 245285.99 $ 27360 2$ 24528.60 2831.40 242454.58 27360 24245.46 3114.54 239340.05 27360 23934.01 3425.99 235914.06 27360 23591.41 3768.59 232145.47 %24 %24 Prepare the entries to record Blue Spruce's purchase of the bonds on January 1, 2018, the recognition of interest income and interest received on December 31, 2018, and the fair value adjustment required at December 31, 2018. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 2 decimal places, eg. 52.75.) Date Account Titles and Explanation Debit Credit Jan. 1, FV-NI Investments 245285.99 2018 Cash 245285.99 Dec. 31, Cash 27360 2018 FV-NI Investments 2831.40 Interest Income 24528.60 (To record collection of interest) 1245.41 Unrealized Gain or Loss 1245.41 (To record fair value adjustment) Prepare all entries required for 2019, including recognition of the impairment in value if necessary, and for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 2 decimal places, e.g. 52.75.) Date Account Titles and Explanation Debit Credit Dec. 31, Cash 27360 2019 FV-NI Investments 3114.54 Interest Income 24245.46 (To record collection of interest) FV-NI Investments Unrealized Gain or Loss (To record fair value adjustment) Dec. 31, Cash 27360 2020 FV-NI Investments 3425.99 Interest Income 23934.011 Dec. 31, Cash 27360 2019 FV-NI Investments 3114.54 Interest Income 24245.46 (To record collection of interest) FV-NI Investments Unrealized Gain or Loss (To record fair value adjustment) Dec. 31, Cash 27360 2020 FV-NI Investments 3425.99 Interest Income 23934.011 (To record interest income) FV-NI Investments Unrealized Gain or Loss (To record fair value adjustment) Prepare all entries required for 2021, including recognition of the recovery of the impairment in value, if necessary. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 2 decimal places, e.g. 52.75.) Date Account Titles and Explanation Debit Credit Dec. 31, Cash 27360 2021 FV-NI Investments 3768.59 Interest Income 23591.41 (To record collection of interest) FV-NI Investments Unrealized Gain or Loss (To record fair value adjustment)

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