Rell Corporation reports under IFRS No. 9. Rell has an investment in Tirish, Inc. bonds that Rell

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Rell Corporation reports under IFRS No. 9. Rell has an investment in Tirish, Inc. bonds that Rell accounts for at amortized cost, given that the bonds pay only interest and principal and Rell's business purpose is to hold the bonds to maturity. Rell purchased the bonds for €10,000,000. As of December 31, 2018, Rell calculates €750,000 of credit losses expected for default events occurring during 2019 and €450,000 of credit losses expected for default events occurring after 2019.
Required:
1. Assume the Tirish bonds have not had a significant increase in credit risk. Prepare the journal entry to record any impairment loss as of December 31, 2018.
2. Assume the Tirish bonds have had a significant increase in credit risk. Prepare the journal entry to record any impairment loss as of December 31, 2018.
3. Assume the Tirish bonds have not had a significant increase in credit risk, and that as of December 31, 2019, Rell calculates €650,000 of credit losses expected for default events occurring during 2020 and €350,000 of credit losses expected for default events occurring after 2020. Prepare the journal entry Rell would make with respect to any impairment loss as of December 31, 2019.
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Intermediate Accounting

ISBN: 9781259722660

9th Edition

Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

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