Connect Access Card for Fundamentals of Financial Accounting
6th Edition
ISBN: 9781260159509
Author: Fred Phillips Associate Professor, Robert Libby, Patricia Libby
Publisher: McGraw-Hill Education
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Question
Chapter 10, Problem 8CP
1.
To determine
Calculate the cash received from issuance of bonds, and assume that company S uses the simplified effective interest amortization method.
2.
To determine
Prepare
3.
To determine
Prepare journal entry to record the interest payment on December 31, 2018 and 2019.
4.
To determine
Calculate the interest expense that would be reported on the income statements for 2018 and 2019, and show the presentation of bonds that would be reported on the balance sheet at December 31, 2018 and 2019.
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Under IFRS, bond issuance costs, including the printing costs and legal fees associated with the issuance, should be:(a) expensed in the period when the debt is issued.(b) recorded as a reduction in the carrying value of bonds payable.(c) accumulated in a deferred charge account and amortized over the life of the bonds.(d) reported as an expense in the period the bonds mature or are redeemed.
Presented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are classified as available-for-sale.
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12/31/20
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12/31/21
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12/31/22
Amortized cost
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$491,150
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$519,442
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$550,000
Fair value
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497,000
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509,000
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550,000
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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.
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
Chapter 10 Solutions
Connect Access Card for Fundamentals of Financial Accounting
Ch. 10 - Prob. 1QCh. 10 - Prob. 2QCh. 10 - What three factors influence the dollar amount...Ch. 10 - Prob. 4QCh. 10 - Why is Deferred Revenue considered a liability?Ch. 10 - Prob. 6QCh. 10 - Prob. 7QCh. 10 - If a company has a long-term loan that has only...Ch. 10 - What are the reasons that some bonds are issued at...Ch. 10 - Prob. 10Q
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