Accounting for Bonds - Amortized Cost Model (IFRS)

Accounting for bonds - amortized cost model (IFRS)
On January 1, 2020, on their issue date, Diogenes Inc. purchased 9%, $ 200,000, 10-year bonds. Interest is paid annually on December 31. Diogenes uses the amortized cost model and the effective-interest method for amortizing premium or discount. The current market rate was 10% and as a result Diogenes paid $ 187,711 for the bonds. On December 31, 2020, the bonds have a market value of $ 185,000.
Instructions
a) Record the receipt of interest for 2020.
b) Record the amortization of the discount for 2020.

Correct Answer:

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a)
b)No entry is required. Using the amo...

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