On January L 2000, $1,000,000 of 10 percent debenture bonds were acquired by Means Corporation at $927,908, which would yield a 12 percent rate of return. The bonds mature on December 31, 2004. Interest is paid annually on December 31. Means Corporation classifies these securities as available-far-sale securities. Shown below are the effective interest rate and market value of the securities at various dates. Required: a. Using the method suggested by Kathryn Means (i.e., use the current interest rate for the recognition of income and determination of fair value with the holding gain component going to owners' equity), t.u...._JearS-.2000-thIough 2004 {assume that-the interest-raro occurs on each December 31). b. Make the entries that result from assuming that these debenture bonds were Means Corporation's only available-for-sale securities.
On January L 2000, $1,000,000 of 10 percent debenture bonds were acquired by Means Corporation at $927,908, which would yield a 12 percent rate of return. The bonds mature on December 31, 2004. Interest is paid annually on December 31. Means Corporation classifies these securities as available-far-sale securities. Shown below are the effective interest rate and market value of the securities at various dates. Required: a. Using the method suggested by Kathryn Means (i.e., use the current interest rate for the recognition of income and determination of fair value with the holding gain component going to owners' equity), t.u...._JearS-.2000-thIough 2004 {assume that-the interest-raro occurs on each December 31). b. Make the entries that result from assuming that these debenture bonds were Means Corporation's only available-for-sale securities.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January L 2000, $1,000,000 of 10 percent debenture bonds were acquired by Means Corporation at $927,908, which would yield a 12 percent
Required:
a. Using the method suggested by Kathryn Means (i.e., use the current interest rate for the recognition of income and determination of fair value with the holding gain component going to owners' equity), t.u...._JearS-.2000-thIough 2004 {assume that-the interest-raro occurs on each December 31).
b. Make the entries that result from assuming that these debenture bonds were Means Corporation's only available-for-sale securities.
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