On January 1, Year 1 Naruto Company purchased P100,000 face value 5 year bond of Wolf Corp for P108,660, a price that yields 5pct on a stated interest rate of 7 pct. Interest is payable annually at Dec 31. The bond investment is measured at amortized cost. On Dec 31, Year 3 after paying the periodic interest, Naruto negotiated for a modification of interest from 7 pct to 4.5 pct for the remaining term of the bonds due to continuous decline in the market rate of interest. On this date, Naruto Company had

On January 1, Year 1 Naruto Company purchased P100,000 face value 5 year bond of Wolf Corp for P108,660, a price that yields 5pct on a stated interest rate of 7 pct. Interest is payable annually at Dec 31. The bond investment is measured at amortized cost. On Dec 31, Year 3 after paying the periodic interest, Naruto negotiated for a modification of interest from 7 pct to 4.5 pct for the remaining term of the bonds due to continuous decline in the market rate of interest. On this date, Naruto Company had

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 7C

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Oak Branch Inc. issued $700,000 of 5%, 10-year bonds when the market rate was 4%. They received $757,243. Interest was paid semi-annually. Prepare an amortization table for the first three years of the bonds.
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