Pass journal entries extracts of financial statements

Assignment Help Financial Accounting

Reference no: EM132642707

On 1 January 2019, ABC bought a INR 150,000 5% bond for INR 145,000, incurring issue costs of INR 2,000. Interest is received in arrears. The bond will be redeemed at INR 151,059 on 31 December 2021. The effective rate of interest is 7%.

The fair value of the bond was as follows:

31/12/19 INR 160,000
31/12/20 INR 154,000

Required:

Problem 1: Pass Journal Entries and provide extracts of Financial Statements, with calculations for how the bond will have been accounted for if:

a) ABC planned to hold the bond until the redemption date.

b) ABC planned to trade the bond in the shortterm, selling it for its fair value on 1 January 2020.

Reference no: EM132642707

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