LO $1-$ Chapter $9$

Name:

$1.$ Neptune Enterprises Inc. purchased bonds of Jupiter Company on June $1,2023.$ The bonds were

$19$ marks dated June $1,2023,$ and mature on June $1,2028.$ Interest is payable semi$-$annually on June $1$ and December $1.$ The following information pertains to the Jupiter Company bonds:

Face value of bonds

Coupon rate of bonds

Effective interest rate $\backslash (\backslash$quad $8\backslash \%\backslash )$

Fair value of the Jupiter Company bonds on December $31,2023$:

Neptune Enterprises sold the Jupiter Company bonds on June $1,2024$ at the following rate:

Neptune Enterprises accounts for this investment using the fair value through net income $($FV$-$NI$)$ method. Neptune Enterprises follows ASPE and uses the effective interest method to account for this investment.

Neptune Enterprises has a December $31$ year end.

Required:

$1.$ Calculate the amount paid by Neptune Enterprises to purchase the Jupiter Company bonds, and prepare the journal entry required by Neptune Enterprises to record the purchase $(3$ marks$).$

$2.$ Prepare an amortization schedule for the $2-$year period following the date on which the investment was purchased by Neptune Enterprises $(2$ marks$).$

$3.$ Prepare all journal entries required for Neptune Enterprises to account for its investment in the Jupiter Company bonds on each of the following dates:

$($a$)$ December $1,2023(1\mathrm{.}5$ marks$)$

$($b$)$ December $31,2023(5\mathrm{.}5$ marks$)$

$($c$)$ June $1,2024(6$ marks$)$

$4.$ How would the journal entry change on December $1,2023,$ assuming that Neptune Enterprises follows IFRS instead of ASPE $(1$ mark$)?$