On January 1, 2024, Oriole Inc. purchased an investment in Drexall Inc. bonds for $160,000, at par value. The bonds pay interest on December 31 each year. However, the company has determined that, due to a default on making interest and principal payments, there is objective evidence of impairment, which represents a triggering or loss event. The present value of the discounted revised cash flows is $128,400 using the original effective interest rate and $118,400 using the current market interest rate. The market value of the bonds is $108,400. Prepare the journal entries for impairment under ASPE and IFRS, respectively, assuming the company uses the amortized cost model.

On January 1, 2024, Oriole Inc. purchased an investment in Drexall Inc. bonds for $160,000, at par value. The bonds pay interest on December 31 each year. However, the company has determined that, due to a default on making interest and principal payments, there is objective evidence of impairment, which represents a triggering or loss event. The present value of the discounted revised cash flows is $128,400 using the original effective interest rate and $118,400 using the current market interest rate. The market value of the bonds is $108,400. Prepare the journal entries for impairment under ASPE and IFRS, respectively, assuming the company uses the amortized cost model.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 3MC: On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9%...

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