Repeat E 16-19 assuming that Gretta Company reports under lFRS and measures the debt security at amortized cost Grella determines that there has not been a significant increase in credit risk in 2017 or 2018. In 2017, Gretta determines that the probability of default is 1% over the next 12 months and 3% over the life of the investment. In 2018, Gretta determines that there is a 75% probability of default over the next 12 months and a 2% probability over the lifetime of the investment.

Data from E16-19

Gretta Company purchased a debt investment on June 15, 2017, and classified it as held to maturity. On December 31, 2017, the investment had a carrying value of $8,500 and a fair value of $8,000. On that dale, the present value of the future cash flows from the debt investment is $8,100. On December 31, 2018, the carrying value, fair value, and present value of the future cash flows from the investment are $7,900, $7,800, and $7,800, respectively.