Assume the same information as in E9.12, except that the bonds are carried at FV-OCI. The fair
Question:
Assume the same information as in E9.12, except that the bonds are carried at FV-OCI. The fair value of the bonds at December 31 of each year end is as follows:
2019 $320,500 2020 $309,000
Instructions
a. Prepare the journal entries to record the interest received and recognition of fair value for 2019.
b. Prepare the journal entries to record the recognition of fair value for 2020 and assuming the sale of the investment for $309,000 on December 31, 2020, reclassifying any accumulated holding gains or losses to net income.
E9.12
On January 1, 2019, Hi and Lois Company purchased 12% bonds having a maturity value of $300,000 for $322,744.72. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2019, and mature on January 1, 2024, with interest receivable on December 31 of each year. Hi and Lois Company uses the effective interest method to allocate unamortized discount or premium. The bonds are classified as amortized cost investments.
MaturityMaturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
Step by Step Answer:
Intermediate Accounting Volume 1
ISBN: 978-1119496496
12th Canadian edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy