Question

Problem 9-3 The following amortization schedule is for Ayayai Ltd.'s investment in Spangler Corp.'s $102,500, five-year bonds with a 13% interest rate and a 11% yield, which were purchased on December 31, 2019, for $110,184: Cash Received Interest Income Bond Premium Amortized Dec. 31, 2019 Dec. 31, 2020 Dec. 31, 2021 Dec. 31, 2022 Dec 31, 2023 Dec. 31. 2024 $13,338 13,338 13,338 13,338 13,338 $12,120 11,986 11,838 11,673 11,489 $1,218 1,352 1,500 1,665 1,849 Amortized Cost of Bonds $110,184 108,966 107,614 106,114 104,449 102.600 The following schedule presents a comparison of the amortized cost and fair value of the bonds at year end: Amortized cost Fair value Dec. 31, 2020 Dec 31, 2021 Dec. 31, 2022 Dec 31, 2023 $108,966 $107,614 $106,114 $104,449 $108,523 $109,167 $108,395 $106,144 Dec. 31, 2024 $102.600 $102,600 Assume that Ayayai Ltd. follows IFRS and reports interest income separately from other investment income. Prepare the journal entry to record the purchase of these bonds on December 31, 2019, assuming the bonds are accounted for using the amortized cost model. (Credit account titles are automatically indented wh Debit Credit Date Account Titles and Explanation Dec. 31 LINK TO TEXT LINK TO TEXT Prepare the journal entry related to the bonds accounted for using the amortized cost model for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. I Date Account Titles and Explanation Debit Credit Dec. 31 LINK TO TEXT LINK TO TEXT Prepare the journal entry related to the bonds accounted for using the amortized cost model for 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. I Debit Credit Date Account Titles and Explanation Dec. 31 LINK TO TEXT LINK TO TEXT Prepare the journal entry to record the purchase of these bonds, assuming they are held for trading purposes and accounted for using the PV-NI model. (Credit account titles are automatically indented when the Debit Credit Date Account Titles and Explanation Dec. 31 LINK TO TEXT LINK TO TEXT Prepare the journal entry(ies) related to the trading bonds accounted for using the FV-NI model for 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manuall Date Account Titles and Explanation Debit Credit Dec. 31 (To record collection of interest) Dec. 31 (To record fair value adjustment) LINK TO TEXT LINK TO TEXT Prepare the journal entry(ies) related to the bonds accounted for using the FV-NI model for 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no Date Account Titles and Explanation Debit Credit Dec. 31 (To record collection of interest) Dec. 31 (To record fair value adjustment)

Answer 1

Working as follows:

Trn.	Date	Account Titles	Debit	Credit
1)	Dec. 31	Bond Investment at Amortized Cost	$110,184
		Cash		$110,184
2)	Dec. 31	Cash	$13,338
		Bond Investment at Amortized Cost		$1,218
		Interest Income		$12,120
3)	Dec. 31	Cash	$13,338
		Bond Investment at Amortized Cost		$1,500
		Interest Income		$11,838
4)	Dec. 31	FV-NI Investments	$110,184
		Cash		$110,184
5)	Dec. 31	Cash	$13,338
		Investment Income or loss		$13,338
	Dec. 31	Investment Income or loss	$1,017
		FV-NI Investments [$110184 - $109167]		$1,017
6)	Dec. 31	Cash	$13,338
		Investment Income or loss		$13,338
	Dec. 31	Investment Income or loss	$2,251
		FV-NI Investments [$108395 - $106144]		$2,251