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On January 1, 2023, Bramble Limited paid $478,737.60 for 12% bonds with a maturity value of $445,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2023, and mature on January 1, 2028, with interest receivable on December 31 of each year. Bramble applies ASPE using the effective interest method, and has a December 31 year end. Assume that Bramble hopes to make a gain on the bonds as interest rates are expected to fall. Bramble accounts for the bonds at fair value with changes in value taken to net income, and separately recognizes and reports interest income. The fair value of the bonds at December 31 of each year end is as follows:

On January 1, 2023, Bramble Limited paid $478,737.60 for 12% bonds with a maturity value of $445,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2023, and mature on January 1, 2028, with interest receivable on December 31 of each year. Bramble applies ASPE using the effective interest method, and has a December 31 year end. Assume that Bramble hopes to make a gain on the bonds as interest rates are expected to fall. Bramble accounts for the bonds at fair value with changes in value taken to net income, and separately recognizes and reports interest income. The fair value of the bonds at December 31 of each year end is as follows:

Intermediate Accounting: Reporting And Analysis
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
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 16E
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Dec. 31, 2024 = Dec. 31, 2025 Dec. 31, 2025 = Investment Income or Loss FV-NI Investments (To record fair value adjustment) Cash FV-NI Investments Interest Income (To record interest collected) FV-NI Investments Investment Income or Loss (To record gain or loss) TUCT LOOD LL
Transcribed Image Text:Dec. 31, 2024 = Dec. 31, 2025 Dec. 31, 2025 = Investment Income or Loss FV-NI Investments (To record fair value adjustment) Cash FV-NI Investments Interest Income (To record interest collected) FV-NI Investments Investment Income or Loss (To record gain or loss) TUCT LOOD LL
On January 1, 2023, Bramble Limited paid $478,737.60 for 12% bonds with a maturity value of $445,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2023, and mature on January 1, 2028, with interest receivable on December 31 of each year. Bramble applies ASPE using the effective interest method, and has a December 31 year end. Assume that Bramble hopes to make a gain on the bonds as interest rates are expected to fall. Bramble accounts for the bonds at fair value with changes in value taken to net income, and separately recognizes a d reports interest income. The fair value of the bonds at December 31 of each year end is as follows: 2023 $475,400.00 2024 2025 $456,570.00 2026 $451,230.00 2027 $445,000.00 350.00 Prepare the journal entries to record interest income and interest received and recognition of fair value at December 31, 2023, 2024, and 2025. (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. List all debit entries before credit entries. Round answers to 2 decimal places, e.g. 52.75.) Date Dec. 31, 2023 Dec. 31, 2023 Dec. 31, 2024 Account Titles and Explanation Cash FV-NI Investments Interest Income (To record interest collected) FV-NI Investments Investment Income or Loss (To record fair value adjustment) Cash FV-NI Investments Interest Income (To record interest collected) Debit 000 Credit 00 000
Transcribed Image Text:On January 1, 2023, Bramble Limited paid $478,737.60 for 12% bonds with a maturity value of $445,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2023, and mature on January 1, 2028, with interest receivable on December 31 of each year. Bramble applies ASPE using the effective interest method, and has a December 31 year end. Assume that Bramble hopes to make a gain on the bonds as interest rates are expected to fall. Bramble accounts for the bonds at fair value with changes in value taken to net income, and separately recognizes a d reports interest income. The fair value of the bonds at December 31 of each year end is as follows: 2023 $475,400.00 2024 2025 $456,570.00 2026 $451,230.00 2027 $445,000.00 350.00 Prepare the journal entries to record interest income and interest received and recognition of fair value at December 31, 2023, 2024, and 2025. (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. List all debit entries before credit entries. Round answers to 2 decimal places, e.g. 52.75.) Date Dec. 31, 2023 Dec. 31, 2023 Dec. 31, 2024 Account Titles and Explanation Cash FV-NI Investments Interest Income (To record interest collected) FV-NI Investments Investment Income or Loss (To record fair value adjustment) Cash FV-NI Investments Interest Income (To record interest collected) Debit 000 Credit 00 000
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