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LooseLeaf Intermediate Accounting w/ Annual Report; Connect Access Card
8th Edition
ISBN: 9781259542848
Author: J. David Spiceland
Publisher: McGraw-Hill Education
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Question
Chapter 12, Problem 12.9BE
To determine
Debt investments: The financial instruments which are bought by investors, or corporations, or mutual funds, are referred to as debt securities. The investments in debt securities are referred to as debt investments.
International Financial Reporting Standards (IFRS): IFRS are a set of international accounting standards which are framed, approved, and published by International Accounting Standards Board (IASB) for the preparation and disclosure of international financial reports.
To mention: The category of debt investment to be classified as by Incorporation F, according to IFRS umber: 9
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Students have asked these similar questions
10) Given the following Bond Amortization Table, answer the multiple choice question below
the Table.
Interest
Unamortized
DATE
PMT
Expense
Amortization Amortization Carrying Value
1/1/2018
$
45,242 $
654,758
6/30/2018 $ 28,000 $
12/31/2018 $ 28,000 $
6/30/2019 $ 28,000 $
12/31/2019 $ 28,000 $
6/30/2020 $ 28,000 $
40,505 $
35,530 $
32,738 $
4,738 $
659,495
4,975 $
5,224 $
32,975 $
664,470
33,224 $
33,485 $
30,306 $
669,694
5,485 $
24,822 $
675,178
33,759 $
5,759 $
19,063 $
680,937
34,047 $
34,349 $
13,016 $
6,667 $
0.00 $
12/31/2020 $ 28,000 $
6,047 $
686,984
6/30/2021 $ 28,000 $
6,349 $
693,333
12/31/2021 $ 28,000 $
34,667 $
6,667 $
700,000
Question: If this bond were retired on January 1, 2021 at $690,000, then the journal entry
on January 1, 2021 would show:
A. Credit to Discount on Bond Payable in the amount of $3,016
B. Debit to Discount on Bond Payable in the amount of $3,016
C. Gain in the amount of $3,016
D. Loss in the amount of $3,016
Given that a bond's carrying value is $185,000 and the fair value is $183,000, what is the journal entry to record the unrealized holding gain? Would it be a debit or credit to unrealized holding gain? Likewise, if this was a loss, would it be debit or credit to unrealized holding loss? Thanks!
Assuming the investment is appropriately recognized as a financial asset intended to collect contractual cash flows and also to sell the bonds in open market: How much is the interest receivable to be recognized on December 31, 2020?
Chapter 12 Solutions
LooseLeaf Intermediate Accounting w/ Annual Report; Connect Access Card
Ch. 12 - Prob. 12.1QCh. 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 - Prob. 12.11QCh. 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 - Prob. 12.24QCh. 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. 12.1BECh. 12 - Prob. 12.2BECh. 12 - Available -for-sale securities LO12-4 SL...Ch. 12 - Prob. 12.4BECh. 12 - Prob. 12.5BECh. 12 - Prob. 12.6BECh. 12 - Prob. 12.7BECh. 12 - Prob. 12.8BECh. 12 - Prob. 12.9BECh. 12 - Prob. 12.10BECh. 12 - Prob. 12.11BECh. 12 - Prob. 12.12BECh. 12 - Prob. 12.13BECh. 12 - Prob. 12.14BECh. 12 - Prob. 12.15BECh. 12 - Prob. 12.16BECh. 12 - Prob. 12.17BECh. 12 - Prob. 12.18BECh. 12 - Prob. 12.1ECh. 12 - Prob. 12.2ECh. 12 - Prob. 12.3ECh. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Prob. 12.6ECh. 12 - Prob. 12.7ECh. 12 - Prob. 12.8ECh. 12 - Prob. 12.9ECh. 12 - Prob. 12.10ECh. 12 - Prob. 12.11ECh. 12 - Prob. 12.12ECh. 12 - Prob. 12.13ECh. 12 - Prob. 12.14ECh. 12 - Prob. 12.15ECh. 12 - Prob. 12.16ECh. 12 - Prob. 12.17ECh. 12 - Prob. 12.18ECh. 12 - Prob. 12.19ECh. 12 - Prob. 12.20ECh. 12 - Prob. 12.21ECh. 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. 1CPACh. 12 - Prob. 2CPACh. 12 - Prob. 3CPACh. 12 - Prob. 4CPACh. 12 - Prob. 5CPACh. 12 - Prob. 6CPACh. 12 - Prob. 7CPACh. 12 - Prob. 8CPACh. 12 - Prob. 9CPACh. 12 - Prob. 10CPACh. 12 - Prob. 11CPACh. 12 - Prob. 12CPACh. 12 - Prob. 13CPACh. 12 - Prob. 1CMACh. 12 - Prob. 2CMACh. 12 - Prob. 3CMACh. 12 - Prob. 12.1PCh. 12 - Prob. 12.2PCh. 12 - Prob. 12.3PCh. 12 - Prob. 12.4PCh. 12 - Prob. 12.5PCh. 12 - Prob. 12.6PCh. 12 - Prob. 12.7PCh. 12 - Prob. 12.8PCh. 12 - Prob. 12.9PCh. 12 - Prob. 12.10PCh. 12 - Prob. 12.11PCh. 12 - Prob. 12.12PCh. 12 - Prob. 12.13PCh. 12 - P 12–14
Classifying investments
LO12–1 through...Ch. 12 - Prob. 12.15PCh. 12 - Prob. 12.16PCh. 12 - Prob. 12.17PCh. 12 - Prob. 12.18PCh. 12 - Prob. 12.1BYPCh. 12 - Prob. 12.2BYPCh. 12 - Case 12–4
Accounting for debt and equity...Ch. 12 - Prob. 12.6BYPCh. 12 - Prob. 12.7BYP
Knowledge Booster
Similar questions
- q9. Bond premium should be reported in the statement of financial positionA. along with other premium accounts such as those resulting from stock transactions.B. as deferred credit.C. as a direct addition to the face amount of the bonds.D. as a deduction from the face of the bonds.arrow_forward1. Assuming the investment is appropriately recognized as a financial asset intended to collect contractual cash flows and also to sell the bonds in open market: How much interest income is to be recognized in 2021?arrow_forward11. Premiums or discounts associated with available-for-sale debt securities are a. usually not amortized because the effect of the amortization would usually be immaterialb. amortized to interest revenue over the life of the investmentc. usually recorded in separate accounts at the time the bonds are acquiredd. not treated like premiums or discounts on bonds held to maturityarrow_forward
- According to IFRS 9, explain how Lawson should deal with (i) the expected credit loss and (ii) the interest revenue in respect of the above mentioned bond investment held by Martin Company.arrow_forward(Debt Investments) Presented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are classified as available-for-sale. 12/31/17 12/31/18 12/31/19 Amortized cost $491,150 $519,442 $550,000 Fair value 497,000 509,000 550,000 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, 2017. 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, 2018.arrow_forward1. what is the interest expense recognized for the year 2021? 2. what is the share premium to be recognized in relation to the conversion of the convertible bonds?arrow_forward
- 12. All of the following statements regarding available-for-sale debt securities are true, except for a. premiums and discounts are amortizedb. interest revenue may be debited at the time of acquisitionc. the securities will be valued using the lower of cost or market methodd. realized gain or loss is the difference between the amortized cost of the bonds and theproceeds from their salearrow_forwardWhich of the following statements regarding bonds is true? Group of answer choices a. Bonds are liabilities of the issuer. b. Individuals investing in bonds receive dividends. c. Bonds cannot be purchased or sold prior to maturity. d. Income from bonds varies every year. e. The principal invested in bonds is not returned at the time of maturity.arrow_forward14. If bonds are redeemed on maturity date, any premium or discount * a. Is carried forward and written off in the same manner as that used prior to the maturity date. b. Should be used to calculate the O gain or loss resulting from the maturity of the bonds. c. Should be written off directly to a O bond retirement account as the bond will be redeemed. d. Will be fully amortized as its amortization period is designed to coincide with the life of the bond issue.arrow_forward
- Assuming that the company’s business model has an objective of holding debt securities to collect contractual cash flows and hold investment available for sale when opportunity arises, what is the realized gain on sale of the Yankee bonds in 2021?arrow_forwardWhich of the following is a current liability? Select one: O a. A long-term debt maturing currently, which is to be paid with cash in a sinking fund O b. A long-term debt maturing currently, which is to be converted into ordinary shares O c. None of these O d. A long-term debt maturing currently, which is to be retired with proceeds from a new debt issuearrow_forward1.What is the carrying amount of the bonds payable on Dec. 31, 2021? 2.On December 31, 2021, what amount should be recorded as discount or premium on bonds payable? 3.What is the share premium if all the warrants are exercised?arrow_forward
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