On 1 January 2014, Company B purchased 100 5 year, R100 bonds from TP Limited at par. The bonds are redeemable at par and bear interest at 5% per annum. The market rate on equivalent bonds i s 5% on 1 January 2014 and 4.2% on 31 December 2014. On 1 January 2014, Company B incurred direct costs on this transaction of R1 000. On 1 January 2014, the risk of TP defaulting on payments to Company B was assessed as low (2%). At the end of the year (31 December 2014) the risk of default increased significantly to 20%. You are required to: Prepare the journal entries that Company B is required to process in respect of the expected credit losses for the year ended 31 December 2014 assuming the asset is held at amortised cost.
On 1 January 2014, Company B purchased 100 5 year, R100 bonds from TP Limited at par. The bonds are redeemable at par and bear interest at 5% per annum. The market rate on equivalent bonds i s 5% on 1 January 2014 and 4.2% on 31 December 2014. On 1 January 2014, Company B incurred direct costs on this transaction of R1 000. On 1 January 2014, the risk of TP defaulting on payments to Company B was assessed as low (2%). At the end of the year (31 December 2014) the risk of default increased significantly to 20%. You are required to: Prepare the journal entries that Company B is required to process in respect of the expected credit losses for the year ended 31 December 2014 assuming the asset is held at amortised cost.
On 1 January 2014, Company B purchased 100 5 year, R100 bonds from TP Limited at par. The bonds are redeemable at par and bear interest at 5% per annum. The market rate on equivalent bonds i s 5% on 1 January 2014 and 4.2% on 31 December 2014. On 1 January 2014, Company B incurred direct costs on this transaction of R1 000. On 1 January 2014, the risk of TP defaulting on payments to Company B was assessed as low (2%). At the end of the year (31 December 2014) the risk of default increased significantly to 20%. You are required to: Prepare the journal entries that Company B is required to process in respect of the expected credit losses for the year ended 31 December 2014 assuming the asset is held at amortised cost.
On 1 January 2014, Company B purchased 100 5 year, R100 bonds from TP Limited at par. The bonds are redeemable at par and bear interest at 5% per annum. The market rate on equivalent bonds i s 5% on 1 January 2014 and 4.2% on 31 December 2014.
On 1 January 2014, Company B incurred direct costs on this transaction of R1 000.
On 1 January 2014, the risk of TP defaulting on payments to Company B was assessed as low (2%). At the end of the year (31 December 2014) the risk of default increased significantly to 20%.
You are required to:
Prepare the journal entries that Company B is required to process in respect of the expected credit losses for the year ended 31 December 2014 assuming the asset is held at amortised cost.
Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.
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