On January 1, 2015, when the prevailing effective rate on similar instruments was at 7%, INC Company acquired USD3,000,000, 10-year bonds of GHI Company. Transaction costs of USD243,114.27 were incurred in the purchase, resulting to a new effective interest rate of 6%. The bonds will be accounted as a financial asset at fair value through other comprehensive income and will pay interest of 9% every June 30 and December 31. Hence, the investments in bonds of INC Company will be initially recorded at what amount?
On January 1, 2015, when the prevailing effective rate on similar instruments was at 7%, INC Company acquired USD3,000,000, 10-year bonds of GHI Company. Transaction costs of USD243,114.27 were incurred in the purchase, resulting to a new effective interest rate of 6%. The bonds will be accounted as a financial asset at fair value through other comprehensive income and will pay interest of 9% every June 30 and December 31. Hence, the investments in bonds of INC Company will be initially recorded at what amount?
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 14MC: Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the...
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On January 1, 2015, when the prevailing effective rate on similar instruments was at 7%, INC Company acquired USD3,000,000, 10-year bonds of GHI Company. Transaction costs of USD243,114.27 were incurred in the purchase, resulting to a new effective interest rate of 6%. The bonds will be accounted as a financial asset at fair value through other comprehensive income and will pay interest of 9% every June 30 and December 31. Hence, the investments in bonds of INC Company will be initially recorded at what amount?
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