Presented below is information taken from a bond investment amortization schedule with related fair values provided. These bondsare classified as available-for-sale.Amortized costFair value(a) Indicate whether the bonds were purchased at a discount or at a premium.(b)(c)No.(List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. Ifno entry is required, select "No Entry" for the account titles and enter O for the amounts.)(b)C12/31/25 12/31/26 12/31/27$489,700$546,800 $501,000496,100535,800501,000Prepare the adjusting entry to record the bonds at fair value at December 31, 2025. The Fair Value Adjustment account has adebit balance of $1,100 prior to adjustment.Prepare the adjusting entry to record the bonds at fair value at December 31, 2026.DateeTextbook and MediaList of AccountsAccount Titles and ExplanationDebitCred

Bond: A bond is a type of debt financial instrument with a maturity of two years or more.…

Presented below is information taken from a bond investment amortization schedule with related fair values provided. T are classified as available-for-sale. Amortized cost $489,700 Fair value 12/31/25 12/31/26 12/31/27 $546,800 $501,000 501,000 (b) (a) Indicate whether the bonds were purchased at a discount or at a premium. (c) 496,100 535,800 Prepare the adjusting entry to record the bonds at fair value at December 31, 2025. The Fair Value Adjustment debit balance of $1,100 prior to adjustment. Prepare the adjusting entry to record the bonds at fair value at December 31, 2026.

Presented below is information taken from a bond investment amortization schedule with related fair values provided. T are classified as available-for-sale. Amortized cost $489,700 Fair value 12/31/25 12/31/26 12/31/27 $546,800 $501,000 501,000 (b) (a) Indicate whether the bonds were purchased at a discount or at a premium. (c) 496,100 535,800 Prepare the adjusting entry to record the bonds at fair value at December 31, 2025. The Fair Value Adjustment debit balance of $1,100 prior to adjustment. Prepare the adjusting entry to record the bonds at fair value at December 31, 2026.

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.1KTQ

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Similar questions

If there is neither a premium nor discount present, the journal entry to record bond interest payments is _______.
Bond issue costs, such as printing fees, legal fees, commissions, etc. are most appropriately accounted for by a. charging them to an expense account in the year the bonds are actually sold. b. debiting them to unamortized bond issue costs, setting them as a deferred charge on the statement of financial position, and amortizing them in a manner similar to bond discount over the life of the bond. c. charging them to an expense account in the year the bonds are originally dated whether or not they are sold in that year. d. considering them in the measurement of the bonds payable.
Presented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are classified as available-for-sale. 31.12.14 31.12.15 31.12.16Amortized Cost Tk. 491,150 519,442 550000Fair Value Tk. 497,000 509,000 550000Required:(a) Indicate whether the bonds were purchased at a discount or at a premium.(b) Prepare the adjusting entry to record the bonds at fair value at December 31, 2014. The Fair Value Adjustment account has a debit balance of Tk. 1,000 prior to adjustment.(c) Prepare the adjusting entry to record the bonds at fair value at December 31, 2016
When bonds and other debt securities are issued, payments such as legal costs, printing costs, and underwriting fees, are referred to as debt issuance costs (called transaction costs under IFRS). If Rushing International prepares its financial statements using IFRS: a. the recorded amount of the debt is increased by the transaction costs. b. the decrease in the effective interest rate caused by the transaction costs is reflected in the interest expense. c. the transaction costs are recorded separately as an asset. d. the increase in the effective interest rate caused by the transaction costs is reflected in the interest expense.
Which of the following is not a valid statement regarding bonds payable? a. Bonds issued by an entity represent a financial liability and shall be measured at amortized cost using the effective interest method. b. The market price of a bond issue is the present value of its principal amount plus the present value of all future interest payments, both discounted at the market rate of interest when the bonds were issued. c. Bonds that mature at a single date are called term bonds. d. The amortization of a bond premium increases both the recorded interest expense and amortized cost.
Which of the following statements relating to bonds is incorrect? A. A bond’s face value is the amount the issuer must pay to the bondholder at maturity. B. The owner of a registered bond is the person to whom interest payments are mailed. C. A bond will typically sell at a discount when its nominal rate is less than the current market rate of interest. D. A bond is a debt instrument giving the issuer flexibility as to maturity date.
(Debt Investments) Presented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are classified as available-for-sale. 12/31/17 12/31/18 12/31/19 Amortized cost $491,150 $519,442 $550,000 Fair value 497,000 509,000 550,000 Instructions(a) Indicate whether the bonds were purchased at a discount or at a premium.(b) Prepare the adjusting entry to record the bonds at fair value at December 31, 2017. The Fair Value Adjustment account has a debit balance of $1,000 prior to adjustment.(c) Prepare the adjusting entry to record the bonds at fair value at December 31, 2018.
All of the following are differences between IFRS and GAAP in accounting for liabilities except: (a) When a bond is issued at a discount, GAAP records the discount in a separate contra liability account. IFRS records the bond net of the discount.(b) Under IFRS, bond issuance costs reduce the carrying value of the debt. Under GAAP, these costs are recorded as an asset and amortized to expense over the terms of the bond.(c) GAAP, but not IFRS, uses the term “troubled-debt restructurings.”(d) GAAP, but not IFRS, uses the term “provisions” for contingent liabilities which are accrued.
If bonds are redeemed on maturity date, any premium or discount a. Is carried forward and written off in the same manner as that used prior to the maturity date. b. Should be used to calculate the gain or loss resulting from the maturity of the bonds. c. Should be written off directly to a bond retirement account as the bond will be redeemed. d. Will be fully amortized as its amortization period is designed to coincide with the life of the bond issue.
How are the bonds issued, what is the appropriate journal entry? Provide example for issuing bonds. How do we determine the present value of a bond when market rate differs from its contract rate? How do we record the interest payment (provide examples for both premium and discount amortization), using the effective interest method? What is the difference between the effective interest method and the straight line method when amortizing either a discount or a premium? Cite and give credit to the author that you are citing.
Presented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are classified as available-for-sale. 12/31/20 12/31/21 12/31/22 Amortized cost $491,150 $519,442 $550,000 Fair value 497,000 509,000 550,000 Instructions a. Indicate whether the bonds were purchased at a discount or at a premium. b. Prepare the adjusting entry to record the bonds at fair value at December 31, 2020. The Fair Value Adjustment account has a debit balance of $1,000 prior to adjustment. c. Prepare the adjusting entry to record the bonds at fair value at December 31, 2021.
Select the description that best fits each term or phrase. A. Records and tracks the bondholders’ names. B. Is unsecured; backed only by the issuer’s credit standing. C. Has varying maturity dates for amounts owed. D. The legal contract between the issuer and the bondholders. E. Can be exchanged for shares of the issuer’s stock. F. Is unregistered; interest is paid to whoever possesses them. G. Maintains a separate asset account from which bondholders are paid at maturity. H. Pledges specific assets of the issuer as collateral. 1. Registered bond 5. Convertible bond 2. Serial bond 6. Bond indenture 3. Secured bond 7. Sinking fund bond 4. Bearer bond 8. Debenture