On January 1, 2024, Oriole 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 flows is $128,400 using the original effective interest rate and $118,400 using the current market interest rate. The market value of the bonds is $108,400. Prepare the journal entries for impairment under ASPE and IFRS, respectively, assuming the company uses the amortized cost model.
On January 1, 2024, Oriole 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 flows is $128,400 using the original effective interest rate and $118,400 using the current market interest rate. The market value of the bonds is $108,400. Prepare the journal entries for impairment under ASPE and IFRS, respectively, assuming the company uses the amortized cost model.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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12).
Transcribed Image Text:On January 1, 2024, Oriole 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
flows is $128,400 using the original effective interest rate and $118,400 using the current market interest rate. The market value of
the bonds is $108,400.
Prepare the journal entries for impairment under ASPE and IFRS, respectively, assuming the company uses the amortized cost model.
(Credit account titles are automatically indented when 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. List all debit entries before credit entries.)
Account Titles
ASPE
IFRS
Debit
Credit
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