
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
- Adams Products applies manufacturing overhead to jobs based on direct labor hours used. Overhead costs are expected to total $478,600 for the year, and direct labor usage is estimated at 95,200 hours. For the year, $512,350 of overhead costs are incurred, and 98,900 hours are used. Requirement: Compute the budgeted and actual manufacturing overhead rates for the year. (Round answers to 2 decimal places.)arrow_forwardCan you explain this general accounting question using accurate calculation methods?arrow_forwardUse the gross profit method to estimate the company's first quarter-ending inventory.arrow_forward
- Can you solve this general accounting problem with appropriate steps and explanations?arrow_forwardStella Distributors generated revenues of $135,000 during 2023. The company’s expenses included: cost of goods sold of $72,000, operating expenses of $31,000, and a gain on the sale of machinery of $9,000. What is Stella’s gross profit?arrow_forwardBaldwin Corporation incurs a cost of $42.75 per unit, of which $25.40 is variable, to make a product that normally sells for $64.90. A foreign wholesaler offers to buy 5,800 units at $37.60 each. Baldwin will incur additional costs of $3.20 per unit to imprint a logo and to pay for shipping. Compute the increase or decrease in net income Baldwin will realize by accepting the special order, assuming the company has sufficient excess operating capacity.arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
