Komissarov SA has a debt investment in the bonds issued by Keune AG. The bonds were purchased at par for €400,000 and, at the end of 2022, have a remaining life of 3 years with annual interest payments at 10%, paid at the end of each year. 

This debt investment is classified as held-for-collection. Keune is facing a tough economic environment and informs its investors that it will be unable to make all payments according to the contractual terms. The controller of Komissarov has prepared the following revised expected cash flow forecast for this bond investment.

Dec. 31 .................. Expected Cash Flows
2023 ................................... € 35,000
2024 ................................... 35,000
2025 ................................... 385,000
Total cash flows ............. €455,000

Instructions

a. Determine the impairment loss for Komissarov at December 31, 2022.

b. Prepare the entry to record the impairment loss for Komissarov at December 31, 2022.

c. On January 15, 2023, Keune receives a major capital infusion from a private equity investor. It informs Komissarov that the bonds now will be paid according to the contractual terms. Briefly describe how Komissarov would account for the bond investment in light of this new information.