Reference no: EM133053115
Question - On January 1, 2022, Champion Inc. purchased a 10-year bond. Interest is payable semi-annually on January 1 and July 1 of each year. The bonds mature on January 1, 2032. Other information pertaining to this investment follows:
Face value of bond $546,000
Fair value of bond on December 31, 2022 $518,700
Coupon rate on bond 6%
Effective interest rate on bond 8%
Champion Inc. sold this bond investment on July 2, 2023 for the following amount: $526,200
Assume that Champion Inc. follows IFRS, and uses the effective interest method and the FV-OCI method to account for its bond investment.
Champion Inc. has a December 31 year end.
Required -
1. Calculate the amount at which Champion Inc. purchased its bond investment on January 1, 2022.
2. Prepare an amortization schedule for the bond for the period of January 1, 2022 to January 1, 2024.
3. Prepare any journal entries required on each of the following dates:
(a) January 1, 2022
(b) July 1, 2022
(c) December 31, 2022
(d) July 1, 2023
(e) July 2, 2023
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