Accounting for Bond Interest and Impairment
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Questions and Answers

When recording the impairment of a loan, what is the correct debit entry?

  • Impairment account for the loan interest receivable (correct)
  • Provision for impairment loss account
  • Loan interest receivable account
  • Amortization Expenses account

The Profit and Loss Statement (PL) is a quarterly report.

False (B)

What is the purpose of the Monthly Investment Statement?

To record the fair value adjustment of bonds

The Net Tangible Assets (NTA) is calculated during the ___________ tasks.

<p>monthly</p> Signup and view all the answers

What is the purpose of the Goods and Services Tax (GST) report?

<p>To report the goods and services tax (D)</p> Signup and view all the answers

Match the following reports with their frequency:

<p>Profit and Loss Statement (PL) = Monthly Goods and Services Tax (GST) = Quarterly Annual Financial Statements = Yearly Trial Balance (TB) = Monthly</p> Signup and view all the answers

The reviewer provides comments via email during the internal review process.

<p>True (A)</p> Signup and view all the answers

What is the purpose of the Coupon Interest Receivable account?

<p>To record the coupon interest receivable</p> Signup and view all the answers

What is the revision number of the Cornerstone Bond Fund document?

<p>1 (A)</p> Signup and view all the answers

The document was prepared by Isac Lin.

<p>False (B)</p> Signup and view all the answers

What is the name of the fund mentioned in the document?

<p>Cornerstone Bond Fund</p> Signup and view all the answers

The document is dated _________________.

<p>June 24th, 2024</p> Signup and view all the answers

Match the following with the correct step in the procedures:

<p>Invoices = Step 1: Preliminary information Bond Documents = Step 1: Preliminary information Monthly Investment Statement = Step 1: Preliminary information</p> Signup and view all the answers

Who reviewed the document?

<p>Isac Lin (B)</p> Signup and view all the answers

The document has a revision date specified.

<p>False (B)</p> Signup and view all the answers

What is the title of the section that comes after the "Flowchart" section in the Table of Contents?

<p>Procedures</p> Signup and view all the answers

What is the minimum fee for the Trustee Fee (RITC 55%)?

<p>$5,000 (A)</p> Signup and view all the answers

The Accrued charges include only Trustee Fee and Registry Fees.

<p>False (B)</p> Signup and view all the answers

What is the purpose of the Admin and Accounting Fee?

<p>administrative and accounting services</p> Signup and view all the answers

The application of GST and determination of RITC is part of the general guidelines for the maintenance of accurate and comprehensive records for ____________ purposes.

<p>audit and review</p> Signup and view all the answers

Match the following accounts with their corresponding debit and credit actions:

<p>Loan Interest Receivable = Debit Impairment Loss Account = Debit: Impairment Loss</p> Signup and view all the answers

What is the purpose of the Loan Interest Receivable account?

<p>To record loan interest payments from borrowers (D)</p> Signup and view all the answers

The calculation of fees is based on Net Asset Value.

<p>False (B)</p> Signup and view all the answers

What is the frequency of recording charges and updating of payments and balances?

<p>Monthly</p> Signup and view all the answers

Study Notes

Accounting Procedures for Cornerstone Bond Fund

####Recording Interest Receivable

  • Debit: Loan Interest Receivable account
  • Credit: Loan Interest Received account
  • Recognize interest income

####Impairment of Interest Receivable

  • Debit: Impairment Loss account for the impaired amount
  • Credit: Provision for Impairment Loss account
  • Record impairment losses on interest receivable

Bond Interest

####Recording Coupon Interest Receivable

  • Debit: Coupon Interest Receivable account
  • Credit: Interest Received - Bond account

####Recording Amortization Expenses

  • Debit: Amortization Expenses account
  • Credit: Investment Portfolio - Bond account

Fair Value Adjustment of Bond

  • Record fair value adjustment based on Monthly Investment Statement

Reports

####Monthly Tasks

  • Compile Profit and Loss Statement (PL), Balance Sheet (BS), Cash Flow Statement (CF), Trial Balance (TB), and General Ledger (GL)
  • Calculate Net Tangible Assets (NTA)

####Quarterly Tasks

  • Complete Goods and Services Tax (GST) and Business Activity Statements (BAS)

####Yearly Tasks

  • Calculate Short-Term Incentives (STI) for review by tax team
  • Prepare annual financial statements

Accrued Charges

  • Include Trustee Fee, Registry Fees, Audit Fee, and Admin and Accounting Fee
  • Calculate fees based on Gross Asset Value
  • Apply GST and determine RITC
  • Identify Non-Claimable GST
  • Record charges and update payments and balances
  • Maintain accurate and comprehensive records for audit and review purposes
  • Verify calculations and entries for accuracy

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Related Documents

Cornerstone Bond Fund SOP PDF

Description

This quiz assesses your understanding of accounting entries for bond interest receivable, amortization expenses, and impairment losses. Test your knowledge of journal entries and accounts affected.

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