
Accounting for impairments under IFRS (Appendix 12B)
• LO12-2, LO12-8, LO12-9
Rell Corporation reports under IFRS No. 9. Rell has an investment in Tirish, Inc. bonds that Rell accounts for at amortized cost, given that the bonds pay only interest and principal and Rell’s business purpose is to hold the bonds to maturity. Rell purchased the bonds for €10,000,000. As of December 31, 2018, Rell calculates €750,000 of credit losses expected for default events occurring during 2019 and €450,000 of credit losses expected for default events occurring after 2019.
Required:
1. Assume the Tirish bonds have not had a significant increase in credit risk. Prepare the
2. Assume the Tirish bonds have had a significant increase in credit risk. Prepare the journal entry to record any impairment loss as of December 31, 2018.
3. Assume the Tirish bonds have not had a significant increase in credit risk, and that as of December 31, 2019, Rell calculates €650,000 of credit losses expected for default events occurring during 2020 and €350,000 of credit losses expected for default events occurring after 2020. Prepare the journal entry Rell would make with respect to any impairment loss as of December 31, 2019.

Want to see the full answer?
Check out a sample textbook solution
Chapter 12 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
- I need help solving this general accounting question with the proper methodology.arrow_forwardTrevor sells a stock for $10,200. The price at the time of purchase was $6,400. He paid a commission to his broker of $410. How much is Trevor's amount realized?arrow_forwardHow much is the cost of goods sold for the year?arrow_forward
- Can you help me solve this financial accounting question using valid financial accounting techniques?arrow_forwardTrevor sells a stock for $10,200. The price at the time of purchase was $6,400. He paid a commission to his broker of $410. How much is Trevor's amount realized? Answerarrow_forwardI am trying to find the accurate solution to this general accounting problem with the correct explanation.arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
