Journal Entries for Bond Sale and Interest Payment

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What is the fair value of the bonds on December 31, 2023?

1,855,890.12

On what date were the bonds sold at 104 plus accrued interest?

July 1, 2024

How much was the interest income recorded for on December 31, 2022?

$180,000

What entry was made to record unrealized gain for 2022?

<p>Dr Financial asset - FVPL, Cr Unrealized gain (FA-FVPL)</p> Signup and view all the answers

Which account is involved in the presentation of investments under Fair Value through Profit or Loss (FVPL)?

<p>Financial asset - FVPL</p> Signup and view all the answers

What is the yield of the bonds on December 31, 2023?

<p>12%</p> Signup and view all the answers

What is the purpose of recording 'interest income' in the sample problem #2 provided?

<p>To yield interest from the bonds purchased.</p> Signup and view all the answers

In the context of FVOCI transactions, what does 'Unrealized gain - OCI' represent?

<p>An increase in fair value that has not been realized through a sale.</p> Signup and view all the answers

When recording 'Interest income' in the context of FVOCI, what is being amortized?

<p>The interest over time from the bond investment.</p> Signup and view all the answers

What is the purpose of recording 'Gain on sale (FA-FVOCI)' in the FVOCI transactions?

<p>To recognize gains from selling an investment previously classified under FVOCI.</p> Signup and view all the answers

Which statement accurately describes the treatment of 'Financial Asset - FVPL' in the given scenario?

<p>It reflects a financial asset measured at fair value through profit or loss.</p> Signup and view all the answers

What action does 'Unrealized gain/loss (FA-FVOCI)' represent in a transaction involving Fair Value through Other Comprehensive Income?

<p>Recognition of fluctuations in fair value that have not been realized through a sale.</p> Signup and view all the answers

What journal entry would be made to record the amortization of interest in 2023 for Fair Value through Other Comprehensive Income?

<p>Debit Interest income, Credit Financial asset - FVOCI</p> Signup and view all the answers

Which account would be debited to record the sale of an investment for Fair Value through Amortized Cost?

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

In the context of Fair Value through Other Comprehensive Income, what does the Cumulative Balance represent at December 31, 2023?

<p>$137,770.14</p> Signup and view all the answers

If an investment is sold under Fair Value through Other Comprehensive Income, what account should be credited for the gain on sale?

<p>Gain on sale (FA-FVOCI)</p> Signup and view all the answers

What entry is made to record interest income for 2024 in Fair Value through Other Comprehensive Income?

<p>Debit Cash, Credit Interest income</p> Signup and view all the answers

Under Fair Value through Amortized Cost, what entry is made to record the amortization of interest on August 1, 2024?

<p>Debit Interest income, Credit Financial asset - FVAC</p> Signup and view all the answers

What account should be credited when recording the purchase of an investment under Fair Value through Amortized Cost?

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

What journal entry would be made for the amortization of interest in 2023 under the Fair Value through Amortized Cost approach?

<p>Debit Financial asset - FVAC, Credit Interest income</p> Signup and view all the answers

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