On January $1,2021.$ Riverbed Ltd$.$ paid $$342,109,40$ for $12\%$ bonds of Variation Ltd$,$ with a maturity value of $$318,000,$ The bonds provide the bondholders with a $10\%$ yield. They are dated January $1,2021,$ mature on January $1,2026,$ and pay interest each December $31.$ Riverbed acquired the bond investment as part of its portfolio of trading securities and it accounts for the bonds at FV$.$ NL$,$ following IFRS. At December $31,2021,$ Riverbed's year end, the bonds had a fair value of $$339,900,00.$

During $2022,$ the economic outlook related to Variation's primary business took a major downturn, so that Varlation's debt was downgraded. By the end of $2022,$ the bonds were priced at $85,5,$ and at December $31,2023,$ they were seling in the market at $87.$ Conditions reversed in $2024$ and the outlook for Variation significantly improved, leaving its bonds with a fair value of $99$ it December $31,2024.$

Prepare the entries to record Riverbed's purchase of the bonds on Jan uary $1,2021,$ the recognition of interest income and interest received on December $31,2021,$ and the fair value adjus tment required at December $31,2021.$ Credit cccount titlss ore

Account Titles and Explanation

Debit

Credit

FVNi investhents

$(342109\mathrm{.}40$

$($To record collection of interest$)$

$($To record fair value adjustment$)$