Discuss why the effective interest method to amortize bonds premiums or discounts is p II. eferable to straight line method. Present your views in maximum 200 words.
Q: When the effective-interest method is used to amortize bond premium or discount, the periodic…
A: Solution Concept If the coupon rate of bond is greater than the market rate of interest , bond is…
Q: Please explain the determining factors of the interest rate with examples.
A: As per company policy it is only possible to solve one question.
Q: Please answer each of the following questions in detail. Make sure to provide examples for each of…
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A: Premium means when bonds are issued at a price more than its face value of bonds. Discount means…
Q: Which of the following is correct? a. The terms, “yield rate”, “ stated rate”, and “market rate”…
A: Bonds are Debt instruments issued by Corporate to investors to raise funds. Stated Rate of Bond…
Q: Assume bonds payable are amortized using the straight-line amortization method unless stated…
A:
Q: Which of the following is not alid statement regarding nds payable? * a. Bonds issued by an entity…
A: Solution: "The amortization of a bond premium increases both the recorded interest expense and…
Q: a. Assume that the market interest rates were slightly higher than 9% when the bonds were sold.…
A: Bond is a fixed income security which is issued by the company to raise money. Company needs to pay…
Q: Serial bonds are a. Bonds backed by collateral.b. Bonds that mature in installments.c. Bonds the…
A: Bonds: These are the corporate debt units that a company issues and securitizes as tradeable assets.…
Q: Given that a bond's carrying value is $185,000 and the fair value is $183,000, what is the journal…
A: Bonds are priced by discounting future cash flows. Future cash flows include coupons and par value…
Q: Assume bonds payable are amortized using the straight-line amortization method unless stated…
A: 1.a
Q: xplain the calculation to find value of the bonds
A: The value of bond is the present value of coupon payment and present value of par value of bond…
Q: Read the requirements. Requirement 1. Answer the following questions. At what type of bond price…
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Q: Required: 1. Prepare the January 1 journal entry to record the bonds' issuance. 2(a) For each…
A: Journal entries refers to the official book of a firm/company which is used to record the day to day…
Q: If the straight-line method of amortization of bond premium or discount is used, which of the…
A: Bond premium or discount arises at the time of issue of issue can be amortized by the two popular…
Q: Journalize the first interest payment and the amortization of the related bond premium. Round to the…
A: Bonds are fixed income instruments that pay fixed interest income at regular intervals. O maturity…
Q: the effective interest rate method of amortizing bonds allocates the same amount of interest expense…
A: Solution- The preferred method for amortizing (or gradually writing off) a discounted bond is the…
Q: Select the term that best fits each of the following definitions and descriptions.
A: Bonds are the liability of the company which they have to pay after the expiry of the bond’s…
Q: When bonds are issued at a premium and the effective interest method is used for amortization, at…
A: When bonds are issued at a premium and the effective interest method is used for amortization, at…
Q: Please help find issue price of bonds Requirements- Using PV function in excel calculate issue price…
A: calculation of issue price face value of bond -620,000 discount rate 10%…
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A: 16 (a) should be amortized by the straight-line method to interest expense
Q: Assume bonds payable are amortized using the straight-line amortization method unless stated…
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Q: Under the effective interest method of bond discount or premium amortization, the periodic interest…
A: For the purpose of running the operations of the company, the company's will issue financial…
Q: If bonds are issued at a discount and the effective-interest method is used, the amount ofinterest…
A: Bonds: Bonds are a kind of interest bearing notes payable, usually issued by companies,…
Q: A bond has a nominal interest rate of treasury bond rate plus 5%. This same bond requires the entity…
A: A mortgage bond is backed by a mortgage (or a group of mortgages) that is often backed by real…
Q: If bonds are redeemed on maturity date, any premium or discount a. Is carried forward and…
A: When bonds are issued at premium or discount, its discount or premium will be amortized over the…
Q: When bonds are issued at a discount and the effective interest method is used for amortization, at…
A: Effective interest method If bond is issued at discount and effective interest method is used for…
Q: nds are the bonds which are redeemed after fixed no. of years. T/F?
A: Bonds refer to a fixed-income instruments issued by companies to the investors. Bonds act as a debt…
Q: Assuming the bonds are issued at a discount, explain how each column in an amortization schedule is…
A: Introduction: The process of transforming long-term loans or bonds into a series of monthly payments…
Q: Amortizing the discount and premium on bonds is done in two ways. Describe each one.
A: Amortization means the reduction in the amount of liability due to write offs over a regular period.
Q: A $2,600 credit balance in the Premium on Bonds Payable account represents which of the following?…
A: A premium on bonds payable shows the excess value of cash received and the face value of bonds. It…
Q: Assume bonds payable are amortized using the straight-line amortization method unless stated…
A: 1.
Q: From page 9-3 of the VLN, when determining the issue price of a bond, which interest rate would you…
A: Bonds: Bonds are debt instruments that are used by corporations to raise funds. Since bonds are…
Q: Identify the following as either an advantage (A) or a disadvantage (D) of bond financing for a…
A: Definition: Bonds are a kind of interest-bearing notes payable, usually issued by companies,…
Q: A. How much are the proceeds that Shanghai Fashions Company will receive on the issue date of the…
A: A. Time Payments 0.5 325,000*0.03 =9,750 (Semiannual coupon payments) 1 9,750 1.5 9,750…
Q: Which of these items related to bonds would be added back in the Operating section of the SCF under…
A: Bonds means the kind of instrument which acknowledges the debt due from one company to bond holder…
Q: From page 9-3 of the VLN, what are the cash flows from a bond that must be present valued back to…
A: Company requires funding for their investment which can be obtained from broadly two sources.…
Q: Select one: a. Bonds issued at a premium are redeemed for the amount of cash originally received b.…
A: Solution Concept The bond is issued at discount when -the coupon rate is less than…
Q: Under the effective-interest method of bond discount or premium amortization, the periodic interest…
A: Solution Concept Under the effective interest method , the bond is recognized using the…
Q: Calculate the accrued interest (in $) and the total proceeds (in $) of the bond sale. (Round
A: Bond is an instrument that carries fixed coupon payment with them. These are issued to those…
Q: Please read and respond to the three questions below. 1. Under what conditions of bond issuance…
A: 1. State the conditions of bond issuance does a discount on bonds payable arise: Identify the…
Q: Compute the issue price of the bonds 00.000
A: Company has different methods to finance its business, Projects. Issuing of the Bonds also is the…
Q: When a bond is held with the objective of collecting principal and interest payments over the life…
A: As per IFRS 9, Financial instruments Standard The Financial assets can be classified at Amortized…
Q: following: The amount of cash proceeds from the sale of the bonds. Round your answer to the nearest…
A: Loan (mortgage) amortization schedule refers to a schedule which is prepared to shows the periodic…
Q: 11. Under the straight-line amortization method, interest expense on a bond sold at a premium is…
A: Bonds issued are a form of debt or loan for the company, on which it has to pay interest at regular…
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- The effective-interest method of bond amortization finds the difference between the ________ times the ________ and the ________ times the ________. A. stated interest rate, principal, stated interest rate, carrying value B. stated interest rate, principal, market interest rate, carrying value C. stated interest rate, carrying value, market interest rate, principal D. market interest rate, carrying value, market interest rate, principalIf the straight-line method of amortization of bond premium or discount is used, which of the following statements is true? Group of answer choices Total interest expense will increase over the life of the bonds with the amortization of bond discount. Total interest expense will increase over the life of the bonds with the amortization of bond premium. Total interest expense will decrease over the life of the bonds with the amortization of bond discount. Total interest expense will remain the same over the life of the bonds with the amortization of bond discount.Explain how each of the columns in an amortization schedule is calculated, assuming the bonds are issued at a discount. How is the amortization schedule different if bonds are issued at a premium?
- 1. The amortization of a discount on an investment in bonds measured at amortized cost A. Increases the carrying amount of the investment B. Is the excess of interest income over interest received or receivable. C. Is recorded directly to the invesment account D. All of these 2. Which of the following statements is correct for an investment in term bonds that was acquired at a premium? A. The amortized cost of the bonds increases annually. B. The current and non current portions of the bonds as of the reporting date are reported separately. C. The interest income recognized each year is higher than the amount of interest received/ receivable. D. The effective interest rate is lower than the stated rate of the bonds. 3. The rate used in computing for interest receivable on debt instruments measured at amortized cost is the A. Nominal rate B. Effective interest rate C. Yield rate D. Celeb rate 4. The transaction costs of acquiring an investment measured at…Please answer each of the following questions in detail. Make sure to provide examples for each of the questions below. 1. Please explain the terms associated with the bonds, namely, corporate bond, municipal bond , treasury bill, par value, coupon rate, coupon payment, time to maturity, prevalent interest rate, market value and yield to maturity (YTM). 2. Explain and provide examples of how variations in the prevalent interest rate affects market value of a bond. Kindly answer both the subparts WITH EXAMPLES.65 The amortization of a premium on bonds payable Group of answer choices increases the carrying amount of the bond. decreases the balance of the bonds payable account. increases the amount of interest expense reported. increases the cash payment to bondholders.
- When the effective-interest method is used, the amount of bond discount amortized eachinterest period is equal to thea. amount of interest expense less the cash paid for interest.b. amount of interest expense plus the cash paid for interest.c. face value of the bond times the market interest rate at the date of issue.d. face value of the bond times the stated interest rate.When bonds are retired at maturity, ________. A. the carrying value always equals the face value B. the carrying value equals the face value plus the unamortized premium or less the unamortized discount C. the bondholders are paid the face value plus the unamortized premium or less the unamortized discount D. the entry to retire the bonds may include a gain or loss on retirement of bondsPlease answer each of the following questions in detail and provide in-text citations in support of your argument. Include examples whenever applicable. Make sure to provide examples for each of the questions below.3. Please explain the terms associated with the bonds, namely, corporate bond, municipal bond , treasury bill, par value, coupon rate, coupon payment, time to maturity, prevalent interest rate, market value and yield to maturity (YTM).
- Which of the following is not a valid statement regarding bonds payable? a. Bonds issued by an entity represent a financial liability and shall be measured at amortized cost using the effective interest method. b. The market price of a bond issue is the present value of its principal amount plus the present value of all future interest payments, both discounted at the market rate of interest when the bonds were issued. c. Bonds that mature at a single date are called term bonds. d. The amortization of a bond premium increases both the recorded interest expense and amortized cost.Which of the following is correct? a. The terms, “yield rate”, “ stated rate”, and “market rate” are generally interchangeable when referring to interest on bonds. b. The yield or effective interest rate on a bond is equal to the stated rate if the bond premium or discount is amortized by using the straight-line method. c. Interest revenue and expense related to bonds are always computed using the stated rate of interest. d. If a bond is sold at its face amount, the stated and effective interest rates are the same.2. complete the amoritzation table by calculating interest expense, beginning & ending bond carrying amounts at the end of each period, please show work & formulas used.
