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What are the journal entries related to the bond asset

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Question - Consider a bank who purchases corporate bonds with an intention to hold all loan assets to maturity. That is, the bank's business model is not to trade the bond on a transient basis and sell them before they mature. Consider a 3-year bond asset of the bank. The bond is issued with face value $1,000 and coupon interest rate 10%.

Assume the market interest rate is 8% for the first year of the bond period, 12% for the second year, and 6% for the third. What are the journal entries related to the bond asset for the bank using the amortized cost method?

Reference no: EM131966883

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