Flint Corporation owns corporate bonds at December 31, 2020, accounted for using the amortized cost model. These bonds h
Posted: Sat Mar 19, 2022 5:43 pm
Flint Corporation owns corporate bonds at December 31,
2020, accounted for using the amortized cost model. These bonds
have a par value of $688,000 and an amortized cost of
$678,000. After an impairment review was
triggered, Flint determined that the discounted impaired
cash flows are $634,500 using the current market rate of
interest, but are $631,000 using the market rate when the
bonds were first acquired. The company follows a policy of directly
reducing the carrying amount of any impaired assets. For simplicity
purposes, assume that no impairment loss had been recorded
earlier.
A) Assuming Flint Corporation is a private enterprise
that applies ASPE, prepare the journal entry related to the
impairment at December 31, 2020. (Credit account
titles are automatically indented when the amount is entered. Do
not indent manually. If no entry is required, select "No Entry" for
the account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2020
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
B) Assuming Flint Corporation is a private enterprise
that applies ASPE, prepare the journal entry related to a December
31, 2021 fair value of $654,000 and an adjusted carrying
amount at that date of $637,500. (Credit account
titles are automatically indented when the amount is entered. Do
not indent manually. If no entry is required, select "No Entry" for
the account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2021
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
C) Assuming that Flint Corporation applies IFRS and
that there has been a significant increase in credit risk, prepare
the journal entry related to the impairment at December 31,
2020. (Credit account titles are automatically
indented when the amount is entered. Do not indent manually. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2020
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
D) Assuming Flint Corporation applies IFRS and
that there has been a significant increase in credit risk, prepare
the journal entry related to a December 31, 2021 fair value of
$654,000 and an adjusted carrying amount at that date of
$637,500. Assume that the discounted cash flow numbers provided
reflect the lifetime expected risk of
default. (Credit account titles are automatically
indented when the amount is entered. Do not indent manually. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2021
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
Assume that Flint is a private enterprise under that
applies ASPE and that the company uses a valuation allowance
instead of directly reducing the carrying amount of the investment.
Prepare the entry required for the
impairment. (Credit account titles are
automatically indented when the amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2020
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
E) Assume that Flint is a private enterprise that
applies ASPE, and that the company uses a valuation allowance
instead of directly reducing the carrying amount of the investment.
Prepare the entry required for the subsequent increase in fair
value related to December 31, 2021, assuming fair value of
$654,000 and an adjusted carrying amount at that date of
$637,500. (Credit account titles are automatically
indented when the amount is entered. Do not indent manually. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2021
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
2020, accounted for using the amortized cost model. These bonds
have a par value of $688,000 and an amortized cost of
$678,000. After an impairment review was
triggered, Flint determined that the discounted impaired
cash flows are $634,500 using the current market rate of
interest, but are $631,000 using the market rate when the
bonds were first acquired. The company follows a policy of directly
reducing the carrying amount of any impaired assets. For simplicity
purposes, assume that no impairment loss had been recorded
earlier.
A) Assuming Flint Corporation is a private enterprise
that applies ASPE, prepare the journal entry related to the
impairment at December 31, 2020. (Credit account
titles are automatically indented when the amount is entered. Do
not indent manually. If no entry is required, select "No Entry" for
the account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2020
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
B) Assuming Flint Corporation is a private enterprise
that applies ASPE, prepare the journal entry related to a December
31, 2021 fair value of $654,000 and an adjusted carrying
amount at that date of $637,500. (Credit account
titles are automatically indented when the amount is entered. Do
not indent manually. If no entry is required, select "No Entry" for
the account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2021
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
C) Assuming that Flint Corporation applies IFRS and
that there has been a significant increase in credit risk, prepare
the journal entry related to the impairment at December 31,
2020. (Credit account titles are automatically
indented when the amount is entered. Do not indent manually. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2020
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
D) Assuming Flint Corporation applies IFRS and
that there has been a significant increase in credit risk, prepare
the journal entry related to a December 31, 2021 fair value of
$654,000 and an adjusted carrying amount at that date of
$637,500. Assume that the discounted cash flow numbers provided
reflect the lifetime expected risk of
default. (Credit account titles are automatically
indented when the amount is entered. Do not indent manually. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2021
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
Assume that Flint is a private enterprise under that
applies ASPE and that the company uses a valuation allowance
instead of directly reducing the carrying amount of the investment.
Prepare the entry required for the
impairment. (Credit account titles are
automatically indented when the amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2020
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
E) Assume that Flint is a private enterprise that
applies ASPE, and that the company uses a valuation allowance
instead of directly reducing the carrying amount of the investment.
Prepare the entry required for the subsequent increase in fair
value related to December 31, 2021, assuming fair value of
$654,000 and an adjusted carrying amount at that date of
$637,500. (Credit account titles are automatically
indented when the amount is entered. Do not indent manually. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2021
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount
enter an account title for the journal entry on December 31
enter a debit amount
enter a credit amount