On January 1, 1996, Harvest Moon Inc. purchased $100,000,000 in 11% bonds that will mature in...

On January 1, 1996, Harvest Moon Inc. purchased $100,000,000 in 11% bonds that will mature in 4 years. Management intends to have the investment available-for-sale when the circumstances warrant. For bonds of similar risk and maturity, the market yield was 6%. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, the fair value of the bonds at December 31, 1996, was $90,000,000.

Note: Harvest Moon Inc. follows IFRS.

Instructions:

1. Determine the journal entry to record the investment on January 1, 1996.

2. Determine the journal entry to record interest on June 30, 1996.

3. Determine the journal entry to record interest on December 31, 1996.

4. Determine the adjusting journal entry to report Harvest Moon Inc.'s investment on the December 31, 1996 balance sheet.

5. Determine the amount for "Carrying Value" as well as "Accumulated other comprehensive Income" that will be reported on the December 31, 1996 balance sheet.

Expert Solution

ekkarill92 answered 2 years ago

On January 1, 2018, Brussels Inc. will issue $5,000,000 in bonds that mature in ten years....

On January 1, 2018, Brussels Inc. will issue $5,000,000 in bonds that mature in ten years. The bonds have a stated interest rate of 10% and will pay interest every June 30 and December 31 of each year. Brussels will adopt the straight line amortization method for calculating interest charges per year. REQUIRED: 1. What is the annual interest expense Brussels will have to pay in cash each year? 2. Calculate the cash proceeds of the bond sale if the...

On January 1, 2020, Sheridan Company purchased 11% bonds, having a maturity value of $301,000 for...

On January 1, 2020, Sheridan Company purchased 11% bonds, having a maturity value of $301,000 for $324,415.24. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Sheridan Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows....

On January 1, 2017, Grouper Company purchased 11% bonds, having a maturity value of $313,000, for...

On January 1, 2017, Grouper Company purchased 11% bonds, having a maturity value of $313,000, for $337,348.74. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Grouper Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows....

On January 1, 2017, Bridgeport Company purchased 11% bonds, having a maturity value of $274,000, for...

On January 1, 2017, Bridgeport Company purchased 11% bonds, having a maturity value of $274,000, for $295,314.87. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Bridgeport Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows....

On January 1, 2020, Oriole Company purchased 11% bonds, having a maturity value of $328,000 for...

On January 1, 2020, Oriole Company purchased 11% bonds, having a maturity value of $328,000 for $353,515.61. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Oriole Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows....

On January 1, 2017, Bonita Company purchased 11% bonds, having a maturity value of $314,000, for...

On January 1, 2017, Bonita Company purchased 11% bonds, having a maturity value of $314,000, for $338,426.53. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Bonita Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows....

On January 1, 2017, Sage Company purchased 11% bonds, having a maturity value of $328,000, for...

On January 1, 2017, Sage Company purchased 11% bonds, having a maturity value of $328,000, for $353,515.61. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Sage Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows....

On January 1, 2020, Flounder Company purchased 11% bonds, having a maturity value of $320,000 for...

On January 1, 2020, Flounder Company purchased 11% bonds, having a maturity value of $320,000 for $344,893.28. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Flounder Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows....

On January 1, 2017, Carla Company purchased 11% bonds, having a maturity value of $274,000, for...

On January 1, 2017, Carla Company purchased 11% bonds, having a maturity value of $274,000, for $295,314.87. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Carla Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows....

On January 1, 2020, Sheffield Company purchased 11% bonds, having a maturity value of $289,000 for...

On January 1, 2020, Sheffield Company purchased 11% bonds, having a maturity value of $289,000 for $311,481.74. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Sheffield Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows....

Question