Th e management of Bank EZ repurchases its own bonds in the open market. Th ey pay€6.5 million for bonds with a face value of €10.0 million and a carrying value of €9.8 million. Th e bank will most likely report:A . other comprehensive income of €3.3 million.B . other comprehensive income of €3.5 million.C . a gain of €3.3 million on the income statement.
Q: Accounting for debt investments</b></p><p>League Up &amp; Co. owns vast…
A:
Q: Counting Inc. began operations in Year 1, following is a series of transactions and events involving…
A:
Q: On January 1, 2020, Hilichurl Company purchased 4,000 of P1,000 face value, 10% bonds of Ivory…
A: The effective interest rate uses the carrying amount of the bond to calculate interest income.…
Q: Lance Brothers Enterprises acquired $720,000 of 3% bonds, dated July 1, on July 1, 2018, as a…
A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…
Q: Sycamore will record interest revenue in 2022 of?
A: Interest = 92278*0.10/2 - 100000*0.08/2 =P614
Q: Entity A is a toy manufacturer in Hong Kong which commenced its business more than thirty years. On…
A: Since, Entity A may sell the bond if the bond price is attractive or for any other reason determined…
Q: Palestine, Inc. issued JOD2,000,000 par value, 7% convertible bonds at 99 for cash. The net present…
A: Bonds are a form of debt or loan issued by the company on which company has to make regular interest…
Q: On Jan. 1, 2021, Bee Co. settled a P 1,000,000 loan by issuing to the lender 10,000 shares with par…
A: The loan is the amount in which one party lends money to another party. The money is lent for a…
Q: Presented below are three independent situations: a. IKJUN Co. purchased 12% bonds having a maturity…
A: a. Account title and explanation Debit Credit 12% Bonds A/c $107,581 To Bank A/c…
Q: Galaxy Co. purchases rights to collect monthly rents from real-estate owners and securitizes it into…
A: Annual Coupon Payment = 40,000 Total Face Value = 1,000,000
Q: S&L Financial buys and sells securities expecting to earn profits on short-term differences in…
A: Tax: Tax refers to a compulsory payment or a contribution to the state revenue, levied by the…
Q: Identify how much should be included in the specific accounts: a. Issued bonds with face value of…
A: Book value of asset is the value of asset stated in the books of accounts of the firm. It is…
Q: Sycamore, Inc. purchased P100,000 of 8 percent bonds of Alvarado Industries on January 1, 2022, at a…
A: Bond Valuation In the bond valuation it uses either in par value or in discount or in premium on…
Q: On 1 January 2014, Company B purchased 100 5 year, R100 bonds from TP Limited at par. The bonds are…
A: Amortization of Bonds: When bonds are issued at a price which is either less or more than the face…
Q: Feherty, Inc., accounts for its investments under IFRS No. 9 and purchased the following investments…
A: 1.Feherty Inc. decided to account 10 bonds of Donald Company as held to maturity, which would be…
Q: Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $250 million of 8% bonds, dated…
A: Journal: Recording of a business transactions in chronological order.
Q: Red Company had the following portfolio of equity securities to other comprehensive income at…
A: Available for Sale Security: It is the Investments in equity or debt securities and is classified…
Q: Oblivion Company purchased bonds at a discount of P100,000. Subsequently, the entity sold bonds at a…
A: Unamortized discount at the time of sale = Total discount - amortization of the discount = P100,000…
Q: On 1st July 2002, Midget Ltd. acquired some corporate bonds issued by Farrelly Ltd. These bonds cast…
A: The bonds which pay an interest rate higher than the market interest rate, usually sell at a…
Q: Can you help me to calculate adjusted net income, adjusted net income if FV of security B were…
A: FVOCI is the abbreviation of Fair Value through Other Comprehensive Income, when adjustments are…
Q: Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on…
A:
Q: JKL, Inc. had the following portfolio of investments as of January 1, 2022: Investment Balance ABC…
A: The percentage of ownership in DHI is calculated as below:- Percentage = No of shares held/Total no…
Q: On 1 January 2014, Company B purchased 100 5 year, R100 bonds from TP Limited at par. The bonds are…
A: Calculation of Present value of life-time expected credit losses Expected loss on Future value =…
Q: Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $120 million of 6% bonds, dated…
A: Solution 1 to 3: Journal Entries - Fuzzy Monkey Technologies Inc. Event Date Particulars…
Q: Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to…
A: Amortized Cost Financial assets is reported on a balance sheet at their amortized value ,which is…
Q: uzzy Monkey Technologies, Inc., purchased as a long-term investment $80 million of 8% bonds, dated…
A:
Q: Determine the correct classification of each financial instrument for the year ended 30 June 2021 in…
A: Interest received to accounted on accrual basis and included in income statement
Q: How much is the gain/loss on the sale of the debt investment?
A: The difference between the carrying value of the investment in the books of entity and the price at…
Q: Tanner-UNF Corporation acquired as an investment $240 million of 5% bonds, dated July 1, on July 1,…
A: Investment in bonds is a form of asset for the company. Any changes in the fair value of the bonds…
Q: how much is the interest income in 2023 2.how much is the carrying amount of the bonds at december…
A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
Q: On January 1, 2021, Illuminati Company purchased 10% bonds with a face amount of P3,000,000. Th…
A: Computation of carrying amount of bonds on december 31,2022: Amount Interest income Interest…
Q: How much is the gain on debt restructuring?
A: Meaning Of Debt restructuring Debt Restructuring is opted to avoid risk of defaulting payment of…
Q: Assume bonds payable are amortized using the straight-line amortization method unless stated…
A:
Q: AI Tool and Dye issued 8% bonds with a face amount of $160 million on January 1, 2018. The bonds…
A: Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing…
Q: On Jan. 1, 2021, ABC bought serial bonds with a face value of P2,400,000 for P2,160,000 cash. The…
A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…
Q: 1) Presented below are three independent situations. igel Corporation retired Tk. 130,000 face…
A: The journal entry is the book to record the transaction. Recording the transaction as per the…
Q: On January 1, 2018, CEBU Company purchased 12% bonds, having a maturity value of P800,000, for…
A: As per PFRS 9 the Financial assets shall be initially record at Fair value and add or subtract any…
Q: On January 1, 20X2, Tanangonan Company acquired all the assets and assumed all the liabilities of…
A: Adjusting Entries- Adjusting entries refers to the entries made in the accounts at the end of the…
Q: On January 1, 20x1, Dagul Co. acquired 10%, P4,000,000 bonds for P3,807,853. The principal is due on…
A: Date Amount collected Interest Amortization Present value 01.01.20x1 0 3807853 31.12.20x1…
Q: ement: Prepare Journal Entries on June 1 and selling of warrants.
A: Journal entry: Journal entry is the book of original entry where first transactions are recorded in…
Q: On 1 January 2014, Company B purchased 100 5 year, R100 bonds from TP Limited at par. The bonds…
A: The effective interest rate should be recalculated in order to adjust the transaction costs It is…
Q: Assume that the following balance sheets are stated at book value. The fair market value of James's…
A: Goodwill = Purchase consideration - Net assets Net Assets = ( Total current assets + Total fixed…
Q: Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1,…
A: Loss or gain on sale is calculated by considering all the fair value include discount and deducted…
Q: Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on…
A: 1.The investments, being recorded under the fair value method, the accounting for the…
Q: Carsen Company purchased $200,000 of 10% bonds of Garrison Co. on January 1, 2012, paying $211,950.…
A: Bonds value= $200,000 of 10% paying $211,950 Maturity Date= January 1, 2022 Interest payment is…
Q: Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on…
A: Hey, since there are multiple requirements posted, we will answer first three requirements. If you…
Q: Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on…
A: Hey, since there are multiple requirements posted, we will answer first three requirements. If you…
Q: Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $80 million of 8% bonds, dated…
A:
Q: Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to…
A: Amortized Cost Financial assets is reported on a balance sheet at their amortized value ,which is…
Th e management of Bank EZ repurchases its own bonds in the open market. Th ey pay
€6.5 million for bonds with a face value of €10.0 million and a carrying value of €9.8 million. Th e bank will most likely report:
A . other comprehensive income of €3.3 million.
B . other comprehensive income of €3.5 million.
C . a gain of €3.3 million on the income statement.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- On 1 July 2021, Jill Ltd acquired some corporate bonds issued by Soy Ltd • These bonds cost $1 038 870. They had a ‘face value’ of $1 million and offered a coupon rate of 10 per cent paid annually ($100 000 per year, paid on 30 June). The bonds would repay the principal of $1 million on 30 June 2026 • At the time the market only required a rate of return on 9 per cent on such bonds • Jill Ltd operates within a business model where government bonds are held in order to collect contractual cash flows and there is no intention to trade them • Assume that there were no direct costs associated with acquiring the bonds Based on the above information, calculate the amortised cost of the bonds as at30 June 2022, 2023, 2024, 2025 and 2026On June 1, 20x1, ABC Co acquired investment in bonds with detachable warrants for P1,950,000. The bonds have face amount of P2,000,000. Without the detachable warrants, the bonds are selling at P1,800,000. The warrants have fair value of P150,000. ABC Co business model requires debts instruments to be measured at FVOCI and Equity instruments at fair value. Subsequently, warrants were sold for P120,000. Requirement: Prepare Journal Entries on June 1 and selling of warrants.The following information is also available: 1. Current assets include cash P3,800, accounts receivables P18,500, note receivables (maturity date is on July 1,2023) P10,000 and land P12,000. 2. Long term investments include a P4,600 investment in fair value though other comprehensive income securitiesthat is expected to be sold in 2022 and a P9,000 investment in AllDay company bonds that are expected to be helduntil their December 31, 2029 maturity date. 3. Property and equipment include buildings costing P63,400, inventories costing P30,500 and equipment costingP29,600. 4. Intangible assets include patents that cost P8,200 and on which P2,300 amortization have accumulated, andtreasury shares that costs P1,800. 5. Other assets include prepaid insurance (which expires on November 30, 2022) P2,900, sinking fund for bondretirement P7,000 and trademarks that cost P5,200 and on which P1,500 amortization has accumulated. 6. Current liabilities include accounts payable P19,400, bonds payable…
- The following information is also available: 1. Current assets include cash P3,800, accounts receivables P18,500, note receivables (maturity date is on July 1,2023) P10,000 and land P12,000. 2. Long term investments include a P4,600 investment in fair value though other comprehensive income securitiesthat is expected to be sold in 2022 and a P9,000 investment in AllDay company bonds that are expected to be helduntil their December 31, 2029 maturity date. 3. Property and equipment include buildings costing P63,400, inventories costing P30,500 and equipment costingP29,600. 4. Intangible assets include patents that cost P8,200 and on which P2,300 amortization have accumulated, andtreasury shares that costs P1,800. 5. Other assets include prepaid insurance (which expires on November 30, 2022) P2,900, sinking fund for bondretirement P7,000 and trademarks that cost P5,200 and on which P1,500 amortization has accumulated. 6. Current liabilities include accounts payable P19,400, bonds payable…On January 1, 2018, CEBU Company purchased 12% bonds, having a maturity value of P800,000, for P860,652 including transaction cost of P110,000. The bonds provide the bondholders with a 10% yield, are dated January 1, 2018, and mature Janauary 1, 2023, with interest receivable December 31 of each year. CEBU’s business model requires the accounting of the debt investment at Fair Value Through Other Comprehensive Income (FVOCI). The bonds are quoted at 108 and 109 at the end of 2018 and 2019 respectively. How much is the amount of interest related to bonds was collected in 2019?On January 1, 2018, CHE Co. purchased 12% bonds, having a maturity value of P800,000, for P860,652 including transaction cost of P110,000. The bonds provide the bondholders with a 10% yield, are dated January 1, 2018, and mature January 1, 2023, with interest receivable December 31 of each year. CHE’s business model is to hold these bonds to collect contractual cash flows solely for payment of principal and interest and therefore designate such debt investment at amortized cost. On December 31, 2020 after paying the accrued interest, the issuer of bonds completed a negotiation with its creditors to reduce the interest from 12% to 8% for the remaining term of the bond due to continuous decline in the market rate of interest. The present value of 1 at 10% for 2 periods is 0.8264 while the present value of annuity of 1 at 10% for 2 periods is 1.7355. How much is the carrying value/amortized cost of the debt investment at December 31, 2018?
- On January 1, 2018, CEBU Company purchased 12% bonds, having a maturity value of P800,000, for P860,652 including transaction cost of P110,000. The bonds provide the bondholders with a 10% yield, are dated January 1, 2018, and mature January 1, 2023, with interest receivable December 31 of each year. CEBU’s business model requires the accounting of the debt investment at Fair Value Through Other Comprehensive Income (FVOCI). The bonds are quoted at 108 and 109 at the end of 2018 and 2019 respectively. At what amount should the debt investment be initially recognized at the time of acquisition?On Jan. 1, 20x1, Yngwei Co. purchased 6,000,000, 10% bonds issued by Malsteen, Inc. for 5,116,292. The bonds together with compounded interest are due on Dec. 31, 20x3. What is the effective interest rate on the bonds and how much is the carrying amount of the investment on Dec. 31, 20x2? a. 18% ; 7,897,017. c. 16% ; 6,884,483 b. 16% ; 5,624,483. d. 8%; 4,928,774Good Company has an overdue notes payable of P1,500,000 to Better Company. Accrued interest on the notes amounts to P150,000. Good entered into an agreement with Better Company to exchange equity securities in settlement for the debt. Good Company is issuing 20,000 shares of its P50 par value ordinary shares. The ordinary shares is currently selling at P65. How much is the gain on debt restructuring? a.) P0 b.) P250,000 c.) P350,000 d.) P650,000
- The following information is also available: 1. Current assets include cash P3,800, accounts receivables P18,500, note receivables (maturity date is on July 1, 2023) P10,000 and land P12,000. 2. Long term investments include a P4,600 investment in fair value though other comprehensive income securities that is expected to be sold in 2022 and a P9,000 investment in AllDay company bonds that are expected to be held until their December 31, 2029 maturity date. 3. Property and equipment include buildings costing P63,400, inventories costing P30,500 and equipment costing P29,600. 4. Intangible assets include patents that cost P8,200 and on which P2,300 amortization have accumulated, and treasury shares that costs P1,800. 5. Other assets include prepaid insurance (which expires on November 30, 2022) P2,900, sinking fund for bond retirement P7,000 and trademarks that cost P5,200 and on which P1,500 amortization has accumulated. 6. Current liabilities include accounts payable P19,400, bonds…N company purchased debt investment at amortized cost at a discount of P20,000. Subsequently, N sold these bonds at a premium of P28,000. During the period the N held this investment, amortization of discount amounted to P4,000. How much is the gain/loss on the sale of the debt investment?On 1st July 2002, Midget Ltd. acquired some corporate bonds issued by Farrelly Ltd. These bonds cast $ 2,277,220 and had a life of four years. They had a 'face value' of $ 2 million and offered a coupon rate of 10 per cent paid annually ($ 200,000 per year, paid on 30th June) The bonds would repay the principal of $ 2 million on 30th June 2026. At the time, the market required a rate of return on 6 per cent on such bonds. Midget Ltd. operates within a business model where government bonds are held in order to collect contractual cash flows and there is no intention to trade them. Assume there were no direct costs associated with acquiring the bonds. Needs answers to the following; a) Explain why the company was prepared to pay $ 2,277,220 for the bonds given that, apart from the interest, they expect to receive only $ 2 million back in four years c) Calculate the amortised cost of the bonds as at 30th June 2023, 2024, 2025 and 2026. d) Provide the accounting journal entries for the…