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Prepare the journal entries for impairment

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Question - On January 01, 2021, Piña Inc. Purchased an investment in Drexall Inc. bonds for $160,000 at par value. The bonds pay interest on December 31 each year. However, the company has determined that, due to a default on making interest and principal payments, there is objective evidence of impairment, which represents a triggering or loss event. The present value of the discounted revised cash flow is $129,000 using the original effective interest rate and $118,000 using the current market interest rate. The market value of the bonds is $107,000.

Required - Prepare the journal entries for impairment under ASPE and IFRS, respectively, assuming the company uses the amortized cost model.

Reference no: EM132531322

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