On March 31, Ayayai Corp. invests in a $1,000, 10% bond to be held for...
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On March 31, Ayayai Corp. invests in a $1,000, 10% bond to be held for short-term trading purposes, and accounts for this investment using the FV-NI method. The bonds fair value when acquired was $965, but an additional $17 was paid (and debited to Interest Receivable) representing the interest accrued since the annual interest payment date of February 1. Ayayai applies IFRS, and prepares financial statements each December 31. The effective yield on the bond is 10.50%. The fair value of the bond on December 31 is $958 and on February 1, when Ayayai sells the bond, it is $954. Ayayai Corp. does not use reversing entries.
Your answer is partially correct. Prepare journal entries to record any December 31 adjustments needed. (Round answers to decimal places, eg. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit December 31 Interest Receivable 75 FV-NI Investments 105 Interest Income 180 (To record interest) December 31 Investment Income or Loss 42 FV-NI Investments 42 (To record income or loss) e Textbook and Media List of Accounts
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