INTERMEDIATE ACCOUNTING RMU 9TH EDITION
9th Edition
ISBN: 9781260998726
Author: SPICELAND
Publisher: MCG
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Textbook Question
Chapter 12, Problem 12.3E
Securities held-to-maturity
• LO12-1
FF&T Corporation is a confectionery wholesaler that frequently buys and sells securities to meet various investment objectives. The following selected transactions relate to FF&T’s investment activities during the last two months of 2018. At November 1, FF&T held $48 million of 20-year, 10% bonds of Convenience, Inc., purchased May 1, 2018, at face value. Management has the positive intent and ability to hold the bonds until maturity. FF&T’s fiscal year ends on December 31.
| Nov. 1 | Received semiannual interest of $2.4 million from the Convenience, Inc., bonds. |
| Dec. 1 | Purchased 12% bonds of Facsimile Enterprises at their $30 million face value, to be held until they mature in 2024. Semiannual interest is payable May 31 and November 30. |
| 31 | Purchased U.S. Treasury bills to be held until they mature in two months for $8.9 million. |
| 31 | Recorded any necessary |
The fair values of the investments at December 31 were:
| Convenience bonds | $44.7 million |
| Facsimile Enterprises bonds | 30.9 million |
| U.S. Treasury bills | 8.9 million |
Required:
Prepare the appropriate
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Exercise 12-3 (Algo) Securities held-to-maturity [LO12-1]
FF&T Corporation is a confectionery wholesaler that frequently buys and sells securities to meet various investment objectives. The
following selected transactions relate to FF&T's investment activities during the last two months of 2021. At November 1, FF&T held $3O
million of 25-year, 8% bonds of Convenience, Inc., purchased May 1, 2021, at face value. Management has the positive intent and
ability to hold the bonds until maturity. FF&T's fiscal year ends on December 31.
1 Received semiannual interest of $1.2 million from the Convenience, Inc., bonds.
1 Purchased 10% bonds of Facsimile Enterprises at their $24 million face value, to be held until they mature in 2024.
Semiannual interest is payable May 31 and November 30.
31 Purchased U.S. Treasury bills to be held until they mature in two months for $9.5 million.
31 Recorded any necessary adjusting entry(s) relating to the investments.
Nov.
Dec.
The fair values of the…
PROBLEM E:
You were engaged by SKT Company for the first time on February 15, 2018, to audit their financial statements
as of and for the year ended December 31, 2017. In auditing their investment accounts, you decided to review
the transactions and entries related to an investment in debt securities.
On January 2, 2016, SKT acquired a 5-year 10% bond with a face value of P5,000,000 for P4,800,000. The entity
incurred direct costs for P15,500, resulting to a yield rate of 11%. The business model of the entity for investing
in debt securities is to collect contractual cash flows in the form of principal and interest on the outstanding
principal, and to sell the financial assets.
The bonds are quoted at 101 on December 31, 2016; 97 on December 31, 2017; and 99 on December 31, 2018.
By the end of 2017, the balances in the statement of financial position of their Financial Asset – FVOCI and the
related unrealized holding gain – OCI are P4,850,000 and P50,000, respectively. The entries…
Accounting for debt investments
League Up & Co. owns vast amounts of corporate bonds. Suppose League Up buys $900,000 of CocoCorp bonds at face value on January 2, 2018. The CocoCorp bonds pay interest at the annual rate of 8% on June 30 and December 31 and mature on December 31, 2022. League Up intends to hold the investment until maturity.
Requirements
How would the bond investment be classified on League up’s December 31, 2018, balance sheet?
Journalize the following on League Up’s books:
a. Receipt of final interest payment, on December 31, 2022.
b. Disposition of the investment at maturity on December 31, 2022.
Chapter 12 Solutions
INTERMEDIATE ACCOUNTING RMU 9TH EDITION
Ch. 12 - All investments in debt securities are classified...Ch. 12 - When market rates of interest rise after a...Ch. 12 - Does GAAP distinguish between fair values that are...Ch. 12 - When a debt investment is acquired to be held for...Ch. 12 - Prob. 12.5QCh. 12 - What is comprehensive income? Its composition...Ch. 12 - Why are holding gains and losses treated...Ch. 12 - Prob. 12.8QCh. 12 - Prob. 12.9QCh. 12 - Prob. 12.10Q
Ch. 12 - Under IFRS No. 9, which reporting categories are...Ch. 12 - Prob. 12.12QCh. 12 - Do U.S. GAAP and IFRS differ in the amount of...Ch. 12 - Under what circumstances is the equity method used...Ch. 12 - The equity method has been referred to as a...Ch. 12 - In the application of the equity method, how...Ch. 12 - Prob. 12.17QCh. 12 - Prob. 12.18QCh. 12 - Prob. 12.19QCh. 12 - How does IFRS differ from U.S. GAAP with respect...Ch. 12 - What is the effect of a company electing the fair...Ch. 12 - Define a financial instrument. Provide three...Ch. 12 - Some financial instruments are called derivatives....Ch. 12 - (Based on Appendix 12A) Northwest Carburetor...Ch. 12 - Prob. 12.25QCh. 12 - Prob. 12.26QCh. 12 - (Based on Appendix 12B) Reporting an investment at...Ch. 12 - Prob. 12.28QCh. 12 - Explain how the CECL model (introduced in ASU No....Ch. 12 - Prob. 12.30QCh. 12 - Prob. 12.1BECh. 12 - Prob. 12.2BECh. 12 - Trading securities LO12-3 For the Coca-Cola bonds...Ch. 12 - Available -for-sale securities LO12-4 SL...Ch. 12 - Available -for-sale securities LO12-4 For the...Ch. 12 - Prob. 12.6BECh. 12 - Prob. 12.7BECh. 12 - Prob. 12.8BECh. 12 - Prob. 12.9BECh. 12 - Prob. 12.10BECh. 12 - Equity investments and dividends LO12-5 Turner...Ch. 12 - Prob. 12.12BECh. 12 - Prob. 12.13BECh. 12 - Equity method investments LO12-6, LO12-9 Kim...Ch. 12 - Change in principle; change to the equity method ...Ch. 12 - Fair value option; equity method investments ...Ch. 12 - Prob. 12.17BECh. 12 - Impairments (AFS Credit Loss Model) (Appendix 12B)...Ch. 12 - Prob. 12.19BECh. 12 - Prob. 12.20BECh. 12 - Prob. 12.1ECh. 12 - Prob. 12.2ECh. 12 - Securities held-to-maturity LO12-1 FFT...Ch. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Trading securities LO12-1 [This is a variation of...Ch. 12 - Various transactions relating to trading...Ch. 12 - Prob. 12.8ECh. 12 - Securities available-for-sale; adjusting entries ...Ch. 12 - Available -for-sale securities LO12-1, LO12-4...Ch. 12 - Available -for-sale securities LO12-1, LO12-4...Ch. 12 - Available -for-sale securities LO12-1, LO12-4...Ch. 12 - Classification of securities; adjusting entries ...Ch. 12 - Prob. 12.14ECh. 12 - Equity investments; fair value through net income ...Ch. 12 - Equity investments; fair value through net income ...Ch. 12 - Prob. 12.17ECh. 12 - Equity investments; fair value through net income ...Ch. 12 - Investment securities and equity method...Ch. 12 - Equity method; purchase; investee income;...Ch. 12 - Error corrections; equity method investment ...Ch. 12 - Prob. 12.22ECh. 12 - Prob. 12.23ECh. 12 - Prob. 12.24ECh. 12 - Prob. 12.25ECh. 12 - Prob. 12.26ECh. 12 - Prob. 12.27ECh. 12 - Prob. 12.28ECh. 12 - Prob. 12.29ECh. 12 - Prob. 12.30ECh. 12 - Prob. 12.31ECh. 12 - Prob. 12.32ECh. 12 - Accounting for impairments under IFRS (Appendix...Ch. 12 - Prob. 12.1PCh. 12 - Prob. 12.2PCh. 12 - Securities available-for-sale; bond investment;...Ch. 12 - Prob. 12.4PCh. 12 - Various transactions related to trading securities...Ch. 12 - Various transactions related to securities...Ch. 12 - Prob. 12.7PCh. 12 - Various transactions relating to trading...Ch. 12 - Securities held-to-maturity; securities available...Ch. 12 - Investment securities and equity method...Ch. 12 - Prob. 12.11PCh. 12 - Prob. 12.12PCh. 12 - Prob. 12.13PCh. 12 - Equity method LO12-6, LO12-7 On January 2, 2018,...Ch. 12 - Prob. 12.15PCh. 12 - Prob. 12.16PCh. 12 - Accounting for debt and equity investments ...Ch. 12 - Prob. 12.18PCh. 12 - Real World Case 121 Intels investments LO12-4 The...Ch. 12 - Prob. 12.2BYPCh. 12 - Prob. 12.4BYPCh. 12 - Prob. 12.6BYPCh. 12 - Real World Case 127 Comprehensive income Microsoft...Ch. 12 - Continuing Cases Target Case LO12-4, LO12-6...
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