What amount of unrealized gain/loss should be shown in the 2023 statement of changes in equity?25,23310,98216,88326,455 What amount of unrealized gain/loss should be shown as component of other comprehensive income in the 2022 statement of comprehensive income? 14,39319,34018,5001,222 Kristine Zairah holds debt securities within a business model whose objective is achieved both by collecting contractual cashflows and selling the debt securities. The contractual cash flows are solely payments of principal and interest on specifieddates. The term of the P1,000,000, 7% bonds is 5 years, purchased on December 31, 2019, for P1,086,565. The bonds werepurchased to yield 5% interest. The following schedule presents the fair value of the bonds at year-end.1,065,0001,075,0001,056,5001,030,0001,000,000December 31, 2020December 31, 2021December 31, 2022December 31, 2023December 31, 2024

The debts securities are measured at Fair value through comprehensive income (FVOCI). Initially, it…

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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

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 5RE

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Refer to the information in RE 13-3. Assume that on December 31, 2019, Wolfpack received interest on the Todd Corporation bonds. Wolfpack uses the straight-line method to amortize premiums and discounts. Prepare the December 31 journal entry to record the receipt of the interest. On July 1, 2019, Wolfpack Corporation purchases securities which it intends to buy and sell frequently. These securities consisted of todd Corporation 10%, 5-year bonds with a face value of 20,000 which were purchased for 18,500. Prepare the july 1 journal entry to record the purchase of these trading securities.
On January 1, 2019, Brewster Company issued 2,000 of its 5-year, 1,000 face value, 11% bonds dated January 1 at an effective annual interest rate (yield) of 9%. Brewster uses the effective interest method of amortization. On December 31, 2023, Brewster extinguished the 2,000 bonds early through acquisition in the open market for 1,980,000. On July 1, 2022, Brewster issued 5,000 of its 6-year, 1,000 face value, 10% convertible bonds dated July 1 at an effective annual interest rate (yield) of 12%. The bonds are convertible at the option of the investor into Brewsters common stock at a ratio of 10 shares of common stock for each bond. Brewster uses the effective interest method of amortization. On July 1, 2023, an investor in Brewsters convertible bonds tendered 1,500 bonds for conversion into 15,000 shares of Brewsters common stock, which had a market value of 105 per share at the date of the conversion. Required: 1. Using the information about Brewster, answer the following questions: a. Were the 11% bonds issued at par, at a discount, or at a premium? Why? b. Is the amount of interest expense for the 11% bonds using the effective interest method of amortization higher in the first or second year of the life of the bond issue? Why? 2. Using the information about Brewster, explain the following: a. How is a gain or loss on early extinguishment of debt determined? Does the early extinguishment of the 11% bonds result in a gain or loss? Why? b. How does Brewster report the early extinguishment of the 11% bonds on the 2023 income statement? 3. Based on the information provided about Brewster, answer the following questions: a. Does recording the conversion of the 10% convertible bonds into common stock under the book value method affect net income? What is the rationale for the book value method? b. Does recording the conversion of the 10% convertible bonds into common stock under the market value method affect net income? What is the rationale for the market value method?

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What amount of unrealized gain/loss should be shown in the 2023 statement of changes in equity? 25,233 10,982 16,883 26,455 What amount of unrealized gain/loss should be shown as component of other comprehensive income in the 2022 statement of comprehensive income? 14,393 19,340 18,500 1,222