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    An entity purchased bonds for $400,000 plus $100,000 in broker commissions on January 1, 2020. The bonds have an 8% stated interest rate payable annually on December 31, with an effective rate of 6%. On December 31, 2020, the bonds had a fair value of $600,000. Journal entries were made to record the broker commission expense, interest income for the year at 8% of face value, and an increase in the fair value of the bonds of $200,000.

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    intermediate accounting

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    Document8

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    An entity purchased bonds for $400,000 plus $100,000 in broker commissions on January 1, 2020. The bonds have an 8% stated interest rate payable annually on December 31, with an effective rate of 6%. On December 31, 2020, the bonds had a fair value of $600,000. Journal entries were made to record the broker commission expense, interest income for the year at 8% of face value, and an increase in the fair value of the bonds of $200,000.

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    5 views3 pages

    Document 8

    Uploaded by

    qnlrnr mlla
    An entity purchased bonds for $400,000 plus $100,000 in broker commissions on January 1, 2020. The bonds have an 8% stated interest rate payable annually on December 31, with an effective rate of 6%. On December 31, 2020, the bonds had a fair value of $600,000. Journal entries were made to record the broker commission expense, interest income for the year at 8% of face value, and an increase in the fair value of the bonds of $200,000.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 3

    I ustrat on

    On January 1, 2020, an entity purchased bonds with


    face amount of for plus broker
    commission ofPIOO,OOO.

    The stated interest rate is 8% payable annually every


    December 31 with an effective rate of 6%.

    On December 31, 2020, the bonds had a fair value


    of

    Journal entries for 2020


    Commission expense 100,000
    Cash

    2. Cash (8% x
    400,000
    Interest income 400,000
    3. Financial asset — FVPL 200,000
    1. Financial asset — FVPL
    200,000
    Gain from change in fair value

    559

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