Solution-Prepare journal entries to record the initial

Prepare journal entries to record the initial investment

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Reference no: EM132830581

Beta Corp. invested in a three-year, $100 face value 8% bond, paying $95.03. At this price, the bond will yield a 10% return. Interest is payable annually.

Problem a. Prepare a bond discount amortization table for Beta Corp., assuming Beta uses the effective interest method required by IFRS. Round amounts to the nearest cent.

Problem b. Prepare journal entries to record the initial investment, receipt of interest, and recognition of interest income in each of the three years, and the maturity of the bond at the end of the third year.

Problem c. Assuming Beta Corp. applies ASPE and has chosen to use the straight-line method of amortization, determine the amount of discount that is amortized each year.

Problem d. Under the assumption in part (c), prepare journal entries to record the initial investment, receipt of interest, and recognition of interest income in each of the three years, and the maturity of the bond at the end of the third year.

Problem e. Compare the total interest income under the two methods over the three-year period.

Reference no: EM132830581

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Prepare journal entries to record the initial investment

Reference no: EM132830581

Reference no: EM132830581

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