The company owner contributes 100,000, which is invested in a twenty-year bond with a 5% coupon paid semi-annually. After six months the firm receives the coupon payment of 2500 and the market price has reached 102,000. Show the balance sheet and income statement treatment under each of the following categorizations: held for trading, available for sale, held to maturity.
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
The company owner contributes 100,000, which is invested in a twenty-year bond with a 5% coupon paid semi-annually. After six months the firm receives the coupon payment of 2500 and the market price has reached 102,000. Show the balance sheet and income statement treatment under each of the following categorizations: held for trading, available for sale, held to maturity.
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