Swifty Corporation owns corporate bonds at December 31, 2023, accounted for using the amortized cost model. These bonds have a par value of $896,000 and an amortized cost of $883,000. After an impairment review was triggered, Swifty determined that the discounted impaired cash flows are $826,000 using the current market rate of interest, but are $822,000 using the market rate when the bonds were first acquired. The company follows a policy of directly reducing the carrying amount of any impaired assets. Assume that no impairment loss had been recorded earlier.
Swifty Corporation owns corporate bonds at December 31, 2023, accounted for using the amortized cost model. These bonds have a par value of $896,000 and an amortized cost of $883,000. After an impairment review was triggered, Swifty determined that the discounted impaired cash flows are $826,000 using the current market rate of interest, but are $822,000 using the market rate when the bonds were first acquired. The company follows a policy of directly reducing the carrying amount of any impaired assets. Assume that no impairment loss had been recorded earlier.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 7MCQ
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14, please answer the following question
![Swifty Corporation owns corporate bonds at December 31, 2023, accounted for using the amortized cost model. These bonds have a
par value of $896,000 and an amortized cost of $883,000. After an impairment review was triggered, Swifty determined that the
discounted impaired cash flows are $826,000 using the current market rate of interest, but are $822,000 using the market rate when
the bonds were first acquired. The company follows a policy of directly reducing the carrying amount of any impaired assets. Assume
that no impairment loss had been recorded earlier.
(a1)
Your answer is correct.
Assuming Swifty is a private enterprise that applies ASPE, prepare the journal entry related to the impairment at December 31,
2023. (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.)
Date
(a2)
Dec. 31,
2023
Account Titles and Explanation
eTextbook and Media
Loss on Impairment
List of Accounts
Bond Investment at Amortized Cost
Date
Your answer is correct.
Dec. 31,
2024
Account Titles and Explanation
Bond Investment at Amortized Cost
Debit
Assuming Swifty is a private enterprise that applies ASPE, prepare the journal entry related to a December 31, 2024 fair value of
$851,000 and an adjusted carrying amount at that date of $830,500. (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.)
Recovery of Loss from Impairment
57000
Debit
Credit
20500
57000
Attempts: 1 of 3 used
Credit
20500](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F98b525fd-4637-46f3-ab2a-4d2415ed1028%2F47393358-2638-4410-a81e-29f8549c65a3%2F42qfeee_processed.png&w=3840&q=75)
Transcribed Image Text:Swifty Corporation owns corporate bonds at December 31, 2023, accounted for using the amortized cost model. These bonds have a
par value of $896,000 and an amortized cost of $883,000. After an impairment review was triggered, Swifty determined that the
discounted impaired cash flows are $826,000 using the current market rate of interest, but are $822,000 using the market rate when
the bonds were first acquired. The company follows a policy of directly reducing the carrying amount of any impaired assets. Assume
that no impairment loss had been recorded earlier.
(a1)
Your answer is correct.
Assuming Swifty is a private enterprise that applies ASPE, prepare the journal entry related to the impairment at December 31,
2023. (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.)
Date
(a2)
Dec. 31,
2023
Account Titles and Explanation
eTextbook and Media
Loss on Impairment
List of Accounts
Bond Investment at Amortized Cost
Date
Your answer is correct.
Dec. 31,
2024
Account Titles and Explanation
Bond Investment at Amortized Cost
Debit
Assuming Swifty is a private enterprise that applies ASPE, prepare the journal entry related to a December 31, 2024 fair value of
$851,000 and an adjusted carrying amount at that date of $830,500. (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.)
Recovery of Loss from Impairment
57000
Debit
Credit
20500
57000
Attempts: 1 of 3 used
Credit
20500
![Assuming that Swifty applies IFRS and that there has been a significant increase in credit risk, prepare the journal entry related to
the impairment at December 31, 2023. (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.)
Date Account Titles and Explanation
Dec. 31,
2023
Debit
Credit](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F98b525fd-4637-46f3-ab2a-4d2415ed1028%2F47393358-2638-4410-a81e-29f8549c65a3%2Fp5p2vij_processed.png&w=3840&q=75)
Transcribed Image Text:Assuming that Swifty applies IFRS and that there has been a significant increase in credit risk, prepare the journal entry related to
the impairment at December 31, 2023. (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.)
Date Account Titles and Explanation
Dec. 31,
2023
Debit
Credit
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