1 answer

On June 1, 2016, Hansen Company purchased twenty $1,000 Francisco Company bonds at par and classified...

Question:

On June 1, 2016, Hansen Company purchased twenty $1,000 Francisco Company bonds at par and classified them as held-to-maturity. In 2017, Francisco experienced financial difficulties and Hansen reduced the carrying value of each bond by 50%. In 2018, Francisco improved its financial condition, and Hansen believed that each bond was now worth $850 based on current market yields.

Required: 1. Prepare the journal entries for Hansen to record the above events under U.S. GAAP. 2. How would your answers change if the company uses IFRS?


Answers

Solution 1) Hansen purchased (20x2000) bonds. Therefore the Investment is 20000, The new carrying value after decline in valu

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