Debt Investments, IFRS. Ruban Company, an IFRS reporter, acquired $3,500,000 face value, 8% bonds on January 1 of the current year when the market rate of interest was 10%. Ruban plans to hold the bonds to generate cash flows by collecting contractual cash flows but could sell them if needed, and it passes the SPPI test. Interest is paid annually each December 31. Ruban purchased the bonds, which mature in 12 years, for $3,023,042. Ruban amortizes the discount using the effective interest rate method. The fair value of the bonds at the end of the year is $3,000,000. 

Prepare the journal entries required on the date of acquisition and at the end of the first year after acquisition.

Answer rating: 100% (QA)

Journal entry Date General journal Debit Credit Jan 1 Investment in tradi... View the full answer