Journal Entries for Bond Sale and Interest Payment
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Questions and Answers

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

  • 1,924,184.26
  • 1,980,000
  • 1,855,000
  • 1,855,890.12 (correct)

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

  • December 31, 2023
  • December 31, 2022
  • July 1, 2024 (correct)
  • January 1, 2022

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

  • $180,000 (correct)
  • $99
  • $1,855,000
  • $55,815.74

    • 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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