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What are the journal entries on initial recognition

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Problem 1: What are the journal entries on initial recognition, December 31, 2011, and January 1, 2012 under the Face Value Other Comprehensive Income category?

The following information as follows:

  1. On january 1, 2011 a financial asset was purchased at its face value of 1,000. The contractual term is ten years with an annual coupon of 6%.
  2. On december 31, 2011 a coupon payment was reached. The fair value of the financial asset decreases to 950. 12-month expected credit losses as determined under the impairment model are 30.
  3. On January 1, 2012 the financial asset was sold for 950.

Problem 2: what is the accounting treatment of financial instruments?

Reference no: EM132623577

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