On January 1, 2023, Ayayai Limited paid $467,979.40 for 12% bonds with a maturity value of $435,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2023, and mature on January 1, 2028, with interest receivable on December 31 of each year. Ayayai applies ASPE using the effective interest method, and has a December 31 year end. Assume that Ayayai hopes to make a gain on the bonds as interest rates are expected to fall. Ayayai accounts for the bonds at fair value with changes in value taken to net income, and separately recognizes and reports interest income. The fair value of the bonds at December 31 of each year end is as follows: 2023 $464,800.00 2024 $448,050.00 2025 $446,310.00 2026 $441,090.00 2027 $435,000.00
On January 1, 2023, Ayayai Limited paid $467,979.40 for 12% bonds with a maturity value of $435,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2023, and mature on January 1, 2028, with interest receivable on December 31 of each year. Ayayai applies ASPE using the effective interest method, and has a December 31 year end. Assume that Ayayai hopes to make a gain on the bonds as interest rates are expected to fall. Ayayai accounts for the bonds at fair value with changes in value taken to net income, and separately recognizes and reports interest income. The fair value of the bonds at December 31 of each year end is as follows: 2023 $464,800.00 2024 $448,050.00 2025 $446,310.00 2026 $441,090.00 2027 $435,000.00
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 5P: Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and...
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make journal entries for recording interest income and interest received and recognition of FV at dec31, 2023, 2024, and 2025.
the entries should be:
to record interest collected (3 lines)
to record Fair value adjustment
to record interest collected (3 lines)
to record Fair value adjustment
to record interest collected (3 lines)
to record gain or loss
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