please fill the empty spot from the acco
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
15. please fill the empty spot from the account list. thanks
Transcribed Image Text:On January 1, 2021, Novak Ltd. paid $316,289.83 for 12% bonds of Variation Ltd. with a maturity value of $294,000. The bonds
provide the bondholders with a 10% yield. They are dated January 1, 2021, mature on January 1, 2026, and pay interest each
December 31. Novak acquired the bond investment as part of its portfolio of trading securities and it accounts for the bonds at FV-NI,
following IFRS. At December 31, 2021, Novak's year end, the bonds had a fair value of $314,300.00.
During 2022, the economic outlook related to Variation's primary business took a major downturn, so that Variation's debt was
downgraded. By the end of 2022, the bonds were priced at 85.5, and at December 31, 2023, they were selling in the market at 87.
Conditions reversed in 2024 and the outlook for Variation significantly improved, leaving its bonds with a fair value of 99.5 at
December 31, 2024.
(b)
Your answer is partially correct.
Prepare the entries to record Novak's purchase of the bonds on January 1, 2021, the recognition of interest income and interest
received on December 31, 2021, and the fair value adjustment required at December 31, 2021. (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 all debit entries before credit entries. Round answers to 2 decimal places, e.g. 52.75.)
Date
Jan. 1, 2021
Dec. 31, 2021
Account Titles and Explanation
FV-NI Investments
Cash
Cash
(To record collection of interest)
Unrealized Gain or Loss - OCI
FV-NI Investments
(To record fair value adjustment)
Debit
316289.83
35280
2289.93
Credit
31
Transcribed Image Text: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 in Associate
Gain on Disposal of Investments - Cost/Amortized Cost
Gain on Disposal of Investments - FV-NI
Gain on Disposal of Investments - FV-OCI
Gain or Loss in Value of Investment Property
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 - Cost/Amortized Cost
Loss on Disposal of Investments - FV-NI
Loss on Disposal of Investments - FV-OCI
Loss on Impairment
No Entry
Note Investment at Amortized Cost
Other Investments
Recovery of Loss from Impairment
Retained Earnings
Unrealized Gain or Loss
Unrealized Gain or Loss - OCI
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