Prepare journal entries to account for its bond transactions

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Question - Part a - GHI Ltd is a local media enterprise that has its shares listed on Hong Kong Stock Exchange. Owing to expand further its business enterprise, it issued 2-year bonds on April 1, 2021. The bond had a principal amount of $10 million and carry a fixed interest of 6% per annum. Interest is paid semi-annually on 30 September and 31 March. The market interest rate for similar debts was 8% per annum.

Assume GHI Ltd measured its issued bonds at amortized cost. Prepare journal entries to account for its bond transactions during the year ended 30 September 2021.

Part b - Briefly explain the accounting treatment on measuring and recognizing a gain or loss by the debtor on a settlement of debt which involves the transfer of non-cash assets. Also, analyze ANY TWO factors that the company will consider when accepting the transfer of non-cash assets by debtors as settlement of the debt.

Reference no: EM133120678

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