moose inc acquired 100 900 par value 6% year bonds on their date of moose purchas them at a 101% face value what is their effective vield rate?
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- Irving Inc. sold bonds with a $50,000, 10% interest, and 10-year term at $52,000. What is the total amount of interest expense over the life of the bonds?Lydio Company purchased P4,000,000 face value, 10%, 3-year Milo Co. bonds on January 1, 2021 whenthe prevailing market rate of interest was at 12%. Interests are collectible every December 31. Three-fourths of the Milo Co. bonds were sold on July 31, 2022 at total proceeds of P3,500,000. Yield rate at December 31, 2021 and 2022, respectively were 8% and 14%. Assuming that the company’s business model has an objective of holding the debt securities to collect contractual cash flows, what is the realizedgain on sale of Milo Co. bonds?QUESTION 1. Assuming that the company’s business model has an objective of holding the debt securities to collect contractual cash flows and to sell, how much is the interest income in its statement of comprehensive income for the period ending December 31, 2022?QUESTION 2. Assuming that the company’s business model has no objective of holding the debt securities to collect contractual cash flows, the investment is reported in the statement of financial…Mills Corporation acquired as a long-term investment $260 million of 6% bonds, dated July 1, on July 1, 2024. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 4% for bonds of similar risk and maturity. Mills paid $300.0 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2024, was $280.0 million. Required: 1. & 2. Prepare the journal entry to record Mills’ investment in the bonds on July 1, 2024 and interest on December 31, 2024, at the effective (market) rate. 3. At what amount will Mills report its investment in the December 31, 2024, balance sheet? 4. Suppose Moody’s bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2025, for $314 million. Prepare the journal entry to record the sale.
- Mills Corporation acquired as a long-term investment $260 million of 6% bonds, dated July 1, on July 1, 2024. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 4% for bonds of similar risk and maturity. Mills paid $300.0 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2024, was $280.0 million. At what amount will Mills report its investment in the December 31, 2024, balance sheet? Suppose Moody’s bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2025, for $314 million. Prepare the journal entry to record the sale.On May 1, 20x1, Solna Co. acquired ₱100,000 face amount, 10% bonds dated January 1, 20x1 at 102. The purchase price excludes interest. How much is the initial carrying amount of the investment? a. 102,000 b. 99,500 c. 98,667 d. 105,333HodsonCorp. purchased ten $1,000 8% bonds of Eagle Corporation when the market rate of interestwas 6%. Interest is paid semiannually, and the bonds will mature in four years. Using the PVfunction in Excel®, compute the price Hodson paid (the present value) for the bond investment.
- On January 1, 20x1, ABC Co. purchased ₱1,000,000 bonds at a price which reflects a yield rate of 14%. The bonds mature on January 1, 20x4 and pay 12% annual interest beginning January 1, 20x2. Transaction costs incurred on the acquisition amounted to ₱12,000. The bonds are classified as held for trading securities. On December 31, 20x1, the bonds are selling at a yield rate of 10%. How much is the unrealized gain (loss) on change in fair value recognized in ABC’s 20x1 profit or loss?Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2024. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2024, was $210 million. Required: 1. Suppose Moody’s bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2025, for $190 million. Prepare the journal entry to record the sale.HaddockCorp. purchased fifteen $1,000 7% bonds of Galvan Corporation when the market rate ofinterest was 8%. Interest is paid semiannually, and the bonds will mature in nine years. Usingthe PV function in Excel®, compute the price Haddock paid (the present value) for the bondinvestment.
- Tanner-UNF Corporation acquired as a long-term investment $1 million of 10-year bonds on July 1, 2023. The purchase price of the bonds was $922,054. After receiving the first interest payment on December 31, 2023, the carrying value of the bonds was $925,106. The market price of the bonds on December 31, 2023, was $927,000. Assuming that Tanner - UNF intends to sell the bonds as soon as possible, how much will be reported as investment in bonds on Tanner - unf's balance sheet on a December 31st 2023?And in which section of the balance sheet will the investment appear?Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $80 million of 8% bonds, dated January1, on January 1, 2018. Management has the positive intent and ability to hold the bonds until maturity. For bondsof similar risk and maturity the market yield was 10%. The price paid for the bonds was $66 million. Interest isreceived semiannually on June 30 and December 31. Due to changing market conditions, the fair value of thebonds at December 31, 2018, was $70 million.Required:1. Prepare the journal entry to record Fuzzy Monkey’s investment on January 1, 2018.2. Prepare the journal entry by Fuzzy Monkey to record interest on June 30, 2018 (at the effective rate).3. Prepare the journal entries by Fuzzy Monkey to record interest on December 31, 2018 (at the effective rate).4. At what amount will Fuzzy Monkey report its investment in the December 31, 2018, balance sheet? Why?5. How would Fuzzy Monkey’s 2018 statement of cash flows be affected by this investment?Tanner-UNF Corporation acquired as a long-term investment $220 million of 6% bonds, dated July 1, on July 1, 2024. Company management has classified the bonds as an available-for-sale investment. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $180 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2024, was $190 million. Required: 1. & 2. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2024 and interest on December 31, 2024, at the effective (market) rate. 3. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2024, balance sheet. 4. Suppose Moody’s bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2025, for $170 million. Prepare the journal…
