On December 31, 2020, Phil purchased $20,000 of newly issued bonds of Texas Corporation for $16,568. The bonds are dated December 31, 2020. The bonds are 9%, 10-year bonds paying interest semiannually on June 30 and December 31. The bonds are priced to yield 12% compounded semiannualy. Read the requirements Requirement a. What is the amount of the original issue discount? Start by completing the bond amortization table for the first year. (Round all amounts to the nearest dollar) Amortization of Original Issue Discount Тахраyers Basis for the Bond Year Interest Received Interest Income December 31, 2020 June 30, 2021 December 31, 2021 The amount of the original issue discount is Requirement b. For the first semiannual period, what is the amount the original issue discount Phil must recognize as ordinary income? (Round the amount to the nearest dollar.) The amount of the original issue discount Phil must recognize as ordinary income for the first semiannual period is O Requirement c. What is the total amount of interest income Phil must recognize in 20217 (Round the amount to the nearest dollar) The total amount of interest Phil must recognize in 2021 is Requirement d. What is Phil's basis for the bonds as of December 31, 2021? (Round the amount to the nearest dollar.) The basis for the bonds as of December 31, 2021 is
On December 31, 2020, Phil purchased $20,000 of newly issued bonds of Texas Corporation for $16,568. The bonds are dated December 31, 2020. The bonds are 9%, 10-year bonds paying interest semiannually on June 30 and December 31. The bonds are priced to yield 12% compounded semiannualy. Read the requirements Requirement a. What is the amount of the original issue discount? Start by completing the bond amortization table for the first year. (Round all amounts to the nearest dollar) Amortization of Original Issue Discount Тахраyers Basis for the Bond Year Interest Received Interest Income December 31, 2020 June 30, 2021 December 31, 2021 The amount of the original issue discount is Requirement b. For the first semiannual period, what is the amount the original issue discount Phil must recognize as ordinary income? (Round the amount to the nearest dollar.) The amount of the original issue discount Phil must recognize as ordinary income for the first semiannual period is O Requirement c. What is the total amount of interest income Phil must recognize in 20217 (Round the amount to the nearest dollar) The total amount of interest Phil must recognize in 2021 is Requirement d. What is Phil's basis for the bonds as of December 31, 2021? (Round the amount to the nearest dollar.) The basis for the bonds as of December 31, 2021 is
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 16E
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Transcribed Image Text:On December 31, 2020, Phil purchased $20,000 of newly issued bonds of Texas Corporation for $16,568. The bonds are dated December 31, 2020. The bonds are 9%, 10-year bonds paying interest semiannually on June 30 and December 31. The bonds are priced to yield 12% compounded semiannually.
Read the requirements.
Requirement a. What is the amount of the original issue discount?
Start by completing the bond amortization table for the first year. (Round all amounts to the nearest dollar.)
Amortization of Original
Issue Discount
Taxpayers Basis
for the Bond
Year
Interest Received
Interest Income
December 31, 2020
June 30, 2021
December 31, 2021
The amount of the original issue discount is
Requirement b. For the first semiannual period, what is the amount of the original issue discount Phil must recognize as ordinary income? (Round the amount to the nearest dollar.)
The amount of the original issue discount Phil must recognize as ordinary income for the first semiannual period is
Requirement c. What is the total amount of interest income Phil must recognize in 2021? (Round the amount to the nearest dollar.)
The total amount of interest Phil must recognize in 2021 is
Requirement d. What is Phil's basis for the bonds as of December 31, 2021? (Round the amount to the nearest dollar.)
The basis for the bonds as of December 31, 2021 is
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