On January 1, 20X4, Sirrochi Entity (SE) purchases bonds issued by Gateway Entity (SE) for $6,500,000. SE will receive an annual coupon payment of $500,000 for 5 years and an additional $5,000,000 when the bond expires on December 31, 20X9. One year after the bonds were purchased, SE loses a law suit and is short on cash. SE enters into a contractual agreement with Cash Entity to sell its rights to all future payments from the bond in exchange for $5,500,000. On the date the agreement is made, SE has an asset on its statement of financial position for the bond in the amount of $6,700,000. How will SE account for this outcome (include journal entries)?

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The Answer of On January 1, 20X4, Sirrochi Entity (SE) purchases bonds issued by Gateway Entity (SE) for $6,500,000. SE will receive an annual coupon payment of $500,000 for 5 years and an additional $5,000,000 when the bond expires on December 31, 20X9. One year after the bonds were purchased, SE loses a law suit and is short on cash. SE enters into a contractual agreement with Cash Entity to sell its rights to all future payments from the bond in exchange for $5,500,000. On the date the agreement is made, SE has an asset on its statement of financial position for the bond in the amount of $6,700,000. How will SE account for this outcome (include journal entries)?

On January 1, 20X4, Sirrochi Entity (SE) Purchases Bonds Issued