Question 3: IFRS 9 The investment portfolio of the ABS entity includes investments in the following financial instruments: On 01.01.20X4, the entity received a bond with a fair value of AZN 1,000. In addition to the purchase price, 70 AZN broker fee and 30 AZN documentation costs were incurred. The entity regularly monitors market prices to sell this bond at a reasonable price in the market. Interest income of AZN 50 was calculated and paid during the period. On 31.12.20x4, the bond has a fair value of AZN 1,200, but has not yet been sold. 1. II. On 01.01.20X4, the entity bought a bond with a nominal value of AZN 1,000 for AZN 900. The effective interest rate is 10% and the coupon rate is 7%. The market price of this bond as of 31.12.2004 was AZN 1,100. The entity accounts for these bonds using the fair value method recognized in other comprehensive income. III. On 01.01.20X4, the entity acquired 10,000 shares with a nominal value of 1 AZN for the purpose of sale by paying 1.2 AZN per share. On 31.12.20x4, the market price of those shares was AZN 1.5 per share. Shares still remain in the investment portfolio of the entity. 1. Calculate the net amount to be recognized in the statement of profit or loss regarding the first transaction for the year ended 31.12.20X4. 2. Calculate the amount to be recognized in other comprehensive income regarding the second transaction for the year ended 31.12.20X4. 3. Calculate the amount to be recognized in the statement of profit or loss Regarding the third transaction for the year ended 31.12.20X4.
Question 3: IFRS 9 The investment portfolio of the ABS entity includes investments in the following financial instruments: On 01.01.20X4, the entity received a bond with a fair value of AZN 1,000. In addition to the purchase price, 70 AZN broker fee and 30 AZN documentation costs were incurred. The entity regularly monitors market prices to sell this bond at a reasonable price in the market. Interest income of AZN 50 was calculated and paid during the period. On 31.12.20x4, the bond has a fair value of AZN 1,200, but has not yet been sold. 1. II. On 01.01.20X4, the entity bought a bond with a nominal value of AZN 1,000 for AZN 900. The effective interest rate is 10% and the coupon rate is 7%. The market price of this bond as of 31.12.2004 was AZN 1,100. The entity accounts for these bonds using the fair value method recognized in other comprehensive income. III. On 01.01.20X4, the entity acquired 10,000 shares with a nominal value of 1 AZN for the purpose of sale by paying 1.2 AZN per share. On 31.12.20x4, the market price of those shares was AZN 1.5 per share. Shares still remain in the investment portfolio of the entity. 1. Calculate the net amount to be recognized in the statement of profit or loss regarding the first transaction for the year ended 31.12.20X4. 2. Calculate the amount to be recognized in other comprehensive income regarding the second transaction for the year ended 31.12.20X4. 3. Calculate the amount to be recognized in the statement of profit or loss Regarding the third transaction for the year ended 31.12.20X4.
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 5C: Available-for-Sale Securities The following are four unrelated situations involving investments in...
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Transcribed Image Text:Question 3: IFRS 9
The investment portfolio of the ABS entity includes investments in the following financial instruments:
On 01.01.20X4, the entity received a bond with a fair value of AZN 1,000. In addition to the
purchase price, 70 AZN broker fee and 30 AZN documentation costs were incurred. The entity
regularly monitors market prices to sell this bond at a reasonable price in the market. Interest
income of AZN 50 was calculated and paid during the period. On 31.12.20x4, the bond has a
fair value of AZN 1,200, but has not yet been sold.
1.
II. On 01.01.20X4, the entity bought a bond with a nominal value of AZN 1,000 for AZN 900. The
effective interest rate is 10% and the coupon rate is 7%. The market price of this bond as of
31.12.2004 was AZN 1,100. The entity accounts for these bonds using the fair value method
recognized in other comprehensive income.
III. On 01.01.20X4, the entity acquired 10,000 shares with a nominal value of 1 AZN for the
purpose of sale by paying 1.2 AZN per share. On 31.12.20x4, the market price of those shares
was AZN 1.5 per share. Shares still remain in the investment portfolio of the entity.
1. Calculate the net amount to be recognized in the statement of profit or loss regarding the first
transaction for the year ended 31.12.20X4.
2. Calculate the amount to be recognized in other comprehensive income regarding the second
transaction for the year ended 31.12.20X4.
3. Calculate the amount to be recognized in the statement of profit or loss Regarding the third
transaction for the year ended 31.12.20X4.
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