On October 1, Novak Ltd. purchased 9% bonds with a face value of $1,000 for trading purposes, accounting for the investment at FV- NI. The bonds were priced at 1.023 to yield Novak 6% and pay interest annually each October 1. Novak has a December 31 year end, and at this date, the bonds' fair value was $1,055. Assume Novak applies IFRS.
On October 1, Novak Ltd. purchased 9% bonds with a face value of $1,000 for trading purposes, accounting for the investment at FV- NI. The bonds were priced at 1.023 to yield Novak 6% and pay interest annually each October 1. Novak has a December 31 year end, and at this date, the bonds' fair value was $1,055. Assume Novak applies IFRS.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
9, please answer last part. thanks
please pick from the follow accounts:
Accumulated Other Comprehensive Income
Allowance for Investment Impairment
Bond Investment at Amortized Cost
Cash
Commission Expense
Dividends Receivable
Dividend Revenue
FV-NI Investments
FV-OCI Investments
Gain on Disposal of Investments - FV-NI
Gain on Disposal of Investments - FV-OCI
Gain on Sale of Investments
GST Receivable
Interest Expense
Interest Income
Interest Payable
Interest Receivable
Investment in Associate
Investment Income or Loss
Loss on Discontinued Operations
Loss on Disposal of Investments FV-NI
Loss on Disposal of Investments FV-OCI
Loss on Impairment
Loss on Sale of Investments
No Entry
Note Investment at Amortized Cost
Other Investments
Recovery of Loss from Impairment
Unrealized Gain or Loss
Unrealized Gain or Loss - OCI
Transcribed Image Text:On October 1, Novak Ltd. purchased 9% bonds with a face value of $1,000 for trading purposes, accounting for the investment at FV-
NI. The bonds were priced at 1.023 to yield Novak 6% and pay interest annually each October 1. Novak has a December 31 year end,
and at this date, the bonds' fair value was $1,055. Assume Novak applies IFRS.
(a)
Your Answer
Prepare Novak's journal entry for the purchase of the investment. (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. List debit
entry before credit entry.)
Account Titles and Explanation
(b)
Correct Answer (Used)
FV-NI Investments
Cash
(c)
Answer Correct Answer (Used)
Account Titles and Explanation
Interest Receivable
Prepare Novak's journal entry for the December 31 interest accrual. (Round answers to 2 decimal places, e.g. 52.75. 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. List debit entry before credit entry.)
Investment Income or Loss
Your answer is partially correct.
Account Titles and Explanation
Debit
FV-NI Investments
Investment Income or Loss
Debit
1,023
Debit
Credit
22.50
Prepare Novak's journal entry for the year-end fair value adjustment. (Round answers to 2 decimal places, e.g. 52.75. 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. List debit entry before credit entry.)
Credit
1,023
Credit
22.50
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