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1. On 1 January 2017, Entity A bought a $2,500,000 6.75% bond for $2,368,000. It incurred issue costs of $3,650. Interest is received in arrears.

   The bond will be redeemed at a premium over the face value on 31 December 2019.

   The effective interest rate is 9.25%.

   The fair value of the bond was as follows:

   • 31 December 17 : $2,656,000
   • 31 December 18 : $2,564,800
   • 31 December 19 : $2,735,600

   REQUIRED:

   (1) Measure the amounts recognised in the Statement of Financial Position for the financial asset on 31 December 2018 if Entity A originally planned to hold the bond until the redemption date.

   (2) Measure the amounts of Gain or Loss on remeasurement recognised in the Statement of Profit or Loss and Other Comprehensive Income for the financial asset for the year of 2018 if Entity A originally planned to hold the bond to maturity and may also sell the bond when the possibility of an investment with a higher return arises.

   (3) Measure the amounts of Gain or Loss on remeasurement recognised in the Statement of Profit or Loss and Other Comprehensive Income for the financial asset for the year of 2017 if Entity A originally planned to trade the bond in the short-term, selling it for its fair value on 1 January 2018.

   (4) Measure the amount of the premium over the face value on 31 December 2019.

   ANSWERS:

   (1) The answer = $

   (2) The answer = $ (If it is a gain of $10, enter 10. If it is a loss of $10, enter -10.)

   (3) The answer = $ (If it is a gain of $10, enter 10. If it is a loss of $10, enter -10.)

   (4) The answer = $

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