Question $2(7$ marks$)$

On January $1,2024,$ SpeedyAirlines Inc. $($SAI$)($uses IFRS and has a December $31$ year$-$end$)$ issued $\backslash (\backslash$$ $10,000,000\backslash )$ of $\backslash (5\backslash \%\backslash )$ bonds which pay interest annually on December $31,$ and mature on December $31,2029.$ The market rate of interest for similar bonds on January $1,\backslash (\backslash$underline$\{\backslash$underline$\{2024\}\}\backslash )$ was $\backslash (6\backslash \%\backslash )$ and on December $31,2024$ the market rate of interest for similar bonds was $\backslash (4\backslash \%\backslash ).$

Scenario $1-$ Assume that SAI elected to measure the bonds issued at amortized cost.

Required:

$1)$ Prepare the journal entry to record the issuance of the bonds on January $\backslash (1,\backslash$underline$\{2024\}\backslash )$;

$2)$ Prepare the required journal entry on December $31,2024.$

$3)$ Assume for this part only that SAI repurchased $\backslash (30\backslash \%\backslash )$ of these bonds in the market on January $2,\backslash (\backslash$underline$\{2025\}\backslash )$ at $98($ie: $\backslash (98\backslash \%\backslash )$ of their face value$).$ Prepare the required journal entry on this date.

Scenario $2-$Assume that SAI elected to measure the bonds issued at fair value through profit or loss $($FVPL$)$ and that they only revalue FVPL obligations at year$-$end.

$1)$ Prepare the journal entry to record the issuance of the bonds on January $\backslash (1,\backslash$underline$\{2024\}\backslash )$;

$2)$ Prepare the required journal entry or entries on December $31,2024.$