On October 1, Blue Ltd. purchased a 7% bond with a face value of $ 1,000 for trading purposes, accounting for the investment at fair value through net income. The bond was priced at 1.023 to yield Blue 5%, and pays interest annually each October 1. Blue has a December 31 year end, and at this date, the bond’s fair value was $ 1,050. Assume Blue applies IFRS and follows a policy of not reporting interest income separately from investment income.

can you please explain calculation of Effective interest in this question?

Answer rating: 100% (QA)

Answer Journal entries 1 For the purchase of investment Date Account title and Explanation Debit Cre... View the full answer