Prepare the adjusting entries on december

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Question - Emma Co is a publicly traded company. On January 1, 2019, the company acquired $2,000,000, 8%, 10-years bonds from Saba Co. The yield-to-maturity is 6%, and the interest is paid every six months, on June 30 and December 31. This investment is classified as Amortized Cost Investment.

Required -

1) Prepare the journal entries in the books of Emma from January 1, 2019 to December 31, 2019.

2) Assume the bonds trade at $2,300,000 on December 31, 2019. Prepare the adjusting entries on December 31, 2019, to update the fair value of the bonds assuming Emma decided to classify them as FVTOCI investments.

Reference no: EM133146478

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