On January 1, 2018, Ellison Company purchased 12% bonds, having a maturity value of €800,000, for...

On January 1, 2018, Ellison Company purchased 12% bonds, having a maturity value of €800,000, for €860,652. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2018, and mature January 1, 2023, with interest receivable December 31 of each year. Ellison’s business model is to hold these bonds to collect contractual cash flows.

Instructions

(a) Prepare a bond amortization schedule through 2019.

(b) Prepare any entries necessary at December 31, 2019, using the fair value option, assuming the fair value of the bonds is €840,000.

my answer to part b is:

Dr. Cash 96,000

Cr. Debt invetment 10928

Interest Revenue 85072

is my answer correct?

Expert Solution

Hi

Let me know in case you face any issue:

ekkarill92 answered 2 years ago

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