Problem $10-9$

LO$1,2$

On January $1,$ Year $5,$ Ornate Company Ltd$.$ purchased US: $2,200,000$ of the bonds of the Gem Corporation. The bonds

were trading at par on this date, pay interest at $12\%$ each December $31,$ and mature on December $31,$ Year $7.$ The following

Canadian exchange rates were quoted during Year $5$ :

January $1,$ Year $5$

US $$1=$ C $$1\mathrm{.}392$

December $31,$ Year $5$

US $$1=$ C $$1\mathrm{.}341$

Exchange rates changed evenly throughout the year. These bonds were trading at $102$ at December $31,$ Year $5.$

CHAPTER $10$ Foreign Currency Transactions

Required

Prepare the journal entries for Year $5$ assuming that the investment in bonds are classified as

$($a$)$ Amortized cost,

$($b$)$ Fair value through profit or loss $($FVTPL$),$ and

$($c$)$ Fair value through other comprehensive income $($FVTOCI$).$