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 part c, thanks
Transcribed Image Text: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.)
Account Titles and Explanation
Debit
Credit
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.)
Correct Answer (Used)
Account Titles and Explanation
(b)
FV-NI Investments
Cash
Your Answer Correct Answer (Used)
Account Titles and Explanation
Interest Receivable
Debit
Investment Income or Loss
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.)
1,023
Debit
Credit
22.50
1,023
Credit
22.50
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