4. (16 points) (LO3) Paka Corporation owns an 80% interest in Sandra Company. Paka acquired Sandra's bonds on January 2, 2014. The following information is from the adjusted trial balances at December 31, 2014, at which time the bonds have three years to maturity. The bonds have interest payment dates of January 1 and July 1. Straight-line amortization is used by both companies. Paka Sandra Investment in Sandra Bonds, $100,000 par 98,500 7% Bonds payable, $200,000 Bond premium 200,000 6,000 12,000 Interest expense Interest receivable 7,000 Interest income 7,500 Interest payable 7,000

4. (16 points) (LO3) Paka Corporation owns an 80% interest in Sandra Company. Paka acquired Sandra's bonds on January 2, 2014. The following information is from the adjusted trial balances at December 31, 2014, at which time the bonds have three years to maturity. The bonds have interest payment dates of January 1 and July 1. Straight-line amortization is used by both companies. Paka Sandra Investment in Sandra Bonds, $100,000 par 98,500 7% Bonds payable, $200,000 Bond premium 200,000 6,000 12,000 Interest expense Interest receivable 7,000 Interest income 7,500 Interest payable 7,000

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 18DQ: LO.4, 7 In December 2019, Carl Corporation sold land it held as an investment. The corporation...

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LO.4, 7 In December 2019, Carl Corporation sold land it held as an investment. The corporation received 50,000 in 2019 and a note payable (with adequate interest) for 150,000 to be paid in 2021. Carl Corporations cost of the land was 80,000. The corporation has a 90,000 net capital loss carryover that will expire in 2019. Should Carl Corporation report the sale in 2019 or use the installment method to report the income as payments are received?
ABC Company , a holder of P1,000,000 XYZ Company bonds, collected the interest due on March 31, year 1, and then sold the bonds to W, Inc. for P975,000. On that date, XYZ, a 75% owner of W had P1,075,000 carrying amount for the bonds. What was the effect of W's purchase of XYZ's bond on the noncontrolling interest amount reported in XYZ's March 31, year 1 consolidated balance sheet? (Answer format: amount increase/decrease e.g. 10000 decrease, if no effect, just type 0)
ABC Company , a holder of P1,000,000 XYZ Company bonds, collected the interest due on March 31, year 1, and then sold the bonds to W, Inc. for P975,000. On that date, XYZ, a 75% owner of W had P1,075,000 carrying amount for the bonds. What was the effect of W's purchase of XYZ's bond on the noncontrolling interest amount reported in XYZ's March 31, year 1 consolidated balance sheet?
PLEASE KINDLY ANSWER Problem 3:On June 1, 2021, VIXEN Company received ₱1,077,200 plus accrued interest for 12% bonds with face amount of ₱1,000,000. The bonds were sold to yield 10%. Interest is payable semiannually every July 1 and December 31. The entity elected the fair value option for measuring financial liabilities. On December 31, 2020, the fair value of the bonds is at 108. The change in fair value of the bonds is attributable to market factors.Requirements:16. How much is the interest expense for the year ended December 31, 2021?17. How much is the gain or loss from change in fair value of the bonds for 2021? (In the google form, if loss, put a negative sign before the numerical figure.)18. What is the carrying amount of the bonds payable on December 31, 2021?
On September 1, 2022, when the prevailing market rate on similar instruments was at 5%, ABC Corporation acquired P5,000,000 bonds from R Company. The bonds will be accounted as a financial asset at fair value through other comprehensive income. The bonds pay interest of 6% every March 1 and September 1 and will mature on September 1, 2027. The fair value of the bonds ( dirty price) at year end are presented below: Dec 31, 2022 107 Dec. 31,2023 105 Dec 31, 2024 103 Dec 31, 2025 104 Dec 31, 2026 101 a. what is the amount of adjustment to the unrealized gain or loss-other comprehensive income account to update the fair value of the investment on December 31, 2023? ( debit or credit?) b. prepare the journal entry to record the receipt of interest on march 1, 2024 c. what is the carrying value of the investment in bonds on december 31, 2024? d. If bonds with face value of P2,000,000 were sold at fair value on Decembe 31, 2025, ( after updating the…
On July 1, 2020, an interest date, P1,000,000 of Siomai Company bonds were converted into 20,000 of Siomai Company’s ordinary share, each having a par value of P40 and a market value of P55. There is P40,000 unamortized discount on the bonds and P25,000 paid in capital arising from bond conversion privilege. What amount of gain or loss should Siomai Company recognize in 2016 as a result of the conversion? A. 300,000 B. 185,000 C. 160,000 D. 0
35. On January 1, 2020, Knit Company purchased 8% bonds in the face amount of P8,000,000. The bonds mature on January 1, 2025 and were purchased for P8,671,680 to yield 6%. Knit’s business model for this investment is to collect contractual cash flows composed of principal and interest, and sell the asset in the open market. Interest is payable annually every December 31. The fair value of the bonds on December 31, 2020 was P7,737,600 with an effective yield of 9%. What is the interest income for 2020?
35. On January 1, 2020, Knit Company purchased 8% bonds in the face amount of P8,000,000. The bonds mature on January 1, 2025 and were purchased for P8,671,680 to yield 6%. Knit’s business model for this investment is to collect contractual cash flows composed of principal and interest, and sell the asset in the open market. Interest is payable annually every December 31. The fair value of the bonds on December 31, 2020 was P7,737,600 with an effective yield of 9%. What is the interest income for 2020? a. 780,451 b. 513,119 c. 640,000 d. 520,301
4 On April 1, 2020, Purefoods Company purchased a P1,000,000 face value 8% bond for P910,000 including accrued interest and commission. The commission to acquire the bonds was P5,000. The bonds are dated January 1, 2020 and mature on January 1, 2025, and pay interest semi-annually on January 1 and July 1. On December 31, 2020, the bonds had a fair value of P920,000. On April 1, 2021, Purefoods sold the bonds for a total consideration of P950,000. What amount should Purefoods report as unrealized gain in its 2020 profit or loss? Group of answer choices P30,000 P0 P35,000 P15,000
9. On January 1, 2020, HIBISCUS Company purchased 4,000 of ₱1,000 face value, 10% bonds of IXORA Company for ₱4,270,600. The bonds will mature on January 1, 2025 and pay interest semi-annually on January 1 and July 1. Bonds effective interest rate is 8%. HIBISCUS has a business model of collecting all the contractural cash flows related to the instrument. How much should HIBISCUS report as interest income on the bonds? A. ₱ 160,000B. ₱ 169,657C. ₱ 170,824D. ₱ 340,481
On January 1, 2017, Swen paid $184,000 for $200,000 of the 8%, 20-year bonds of Penn Corporation, issued on January 1, 2013, at par. The bonds are held as an investment. Determine the gain and the character of the gain if the bonds are sold on January 1, 2019, for a. $191,000 b. $185,750 C. $183,000
I ONLY NEED ANSWER OF 16,17 &18 PLEASE KINDLY ANSWER Problem 3:On June 1, 2021, VIXEN Company received ₱1,077,200 plus accrued interest for 12% bonds with face amount of ₱1,000,000. The bonds were sold to yield 10%. Interest is payable semiannually every July 1 and December 31. The entity elected the fair value option for measuring financial liabilities. On December 31, 2020, the fair value of the bonds is at 108. The change in fair value of the bonds is attributable to market factors.Requirements:E. Prepare all necessary entries for calendar year 2021.F. Compute or provide the answers for the following:14. How much is initial valuation of the bonds?15. How much cash was received upon the sale of the bonds?16. How much is the interest expense for the year ended December 31, 2021?17. How much is the gain or loss from change in fair value of the bonds for 2021? (In the google form, if loss, put a negative sign before the numerical figure.)18. What is the carrying amount of the…