Bonds Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond. Early Extinguishment debt When the debt obligations are retired before its scheduled maturity date, the transactions are referred to as early extinguishment of debt. The debt is paid at the market price of the debt and for any difference between the book value of the debt with its market price; the business recognizes the gain or loss on early extinguishment of the debt. To Find out: The recording conversion of the 6% convertible bonds into common stock using the book value method and market value method, it would be affect earnings, how much amount would be differ.

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Answer 1

Question

Chapter 14, Problem 14.11BYP

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Early Extinguishment debt

When the debt obligations are retired before its scheduled maturity date, the transactions are referred to as early extinguishment of debt. The debt is paid at the market price of the debt and for any difference between the book value of the debt with its market price; the business recognizes the gain or loss on early extinguishment of the debt.

To Find out: The recording conversion of the 6% convertible bonds into common stock using the book value method and market value method, it would be affect earnings, how much amount would be differ.

2.

To determine

To Explain: The 7% bonds issued at a face value, or discount or premium.

3.

To determine

To Explain: The amount of interest expense for the 7% bonds be higher in the first year or second year of the term to maturity.

4.

To determine

To Explain: The gain or loss on early extinguishment of debt would be determined. Does the early extinguishment of the 7% bonds result in gain or loss?

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Q#9 On June 30, 2021, Singleton Computers issued 5% stated rate bonds with a face amount of $280 million. The bonds mature on June 30, 2036 (15 years). The market rate of interest for similar bond issues was 4% (2.0% semiannual rate). Interest is paid semiannually (2.5%) on June 30 and December 31, beginning on December 31, 2021. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)Required:1. Determine the price of the bonds on June 30, 2021.2. Calculate the interest expense Singleton reports in 2021 for these bonds using the effective interest method. 1. Table values are based on: n = i = Cash Flow Amount Present Value Interest Principal Price of bonds

Exercise 5-21 (Algo) Price of a bond [LO5-9, 5-10] On September 30, 2024, the Techno Corporation issued 8% stated rate bonds with a face amount of $360 million. The bonds mature on September 30, 2044 (20 years). The market rate of interest for similar bonds was 10%. Interest is paid semiannually on March 31 and September 30. Required: Determine the price of the bonds on September 30, 2024. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount, not in millions. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Time values are based on: n = i= Cash Flow Interest Principal Price of bonds $ Amount 40 5% 9,600,000 $ Present Value 31,195,340

Exercise 14-5 (Algo) Bonds; issuance; effective interest; financial statement effects [LO14-2] Myriad Solutions, Incorporated issued 12% bonds, dated January 1, with a face amount of $330 million on January 1, 2024, for $295,039,998. • The bonds mature on December 31, 2033 (10 years). • For bonds of similar risk and maturity the market yield is 14%. • Interest is paid semiannually on June 30 and December 31. Required: 1. What would be the net amount of the liability Myriad would report in its balance sheet at December 31, 2024? 2. What would be the amount related to the bonds that Myriad would report in its income statement for the year ended December 31, 2024? 3. What would be the amount(s) related to the bonds that Myriad would report in its statement of cash flows for the year ended December 31, 2024? Note: Round your answers to the nearest whole dollar. 1. Net liability reported 2. Interest Expense 3. Amount reported in Statement of Cash flows $ $ 329,059,200 38,659,200 Financing…

Answer 2

Question

Chapter 14, Problem 14.11BYP

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Early Extinguishment debt

When the debt obligations are retired before its scheduled maturity date, the transactions are referred to as early extinguishment of debt. The debt is paid at the market price of the debt and for any difference between the book value of the debt with its market price; the business recognizes the gain or loss on early extinguishment of the debt.

To Find out: The recording conversion of the 6% convertible bonds into common stock using the book value method and market value method, it would be affect earnings, how much amount would be differ.

2.

To determine

To Explain: The 7% bonds issued at a face value, or discount or premium.

3.

To determine

To Explain: The amount of interest expense for the 7% bonds be higher in the first year or second year of the term to maturity.

4.

To determine

To Explain: The gain or loss on early extinguishment of debt would be determined. Does the early extinguishment of the 7% bonds result in gain or loss?

Expert Solution & Answer

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Answer 3

Question

Chapter 14, Problem 14.11BYP

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Early Extinguishment debt

When the debt obligations are retired before its scheduled maturity date, the transactions are referred to as early extinguishment of debt. The debt is paid at the market price of the debt and for any difference between the book value of the debt with its market price; the business recognizes the gain or loss on early extinguishment of the debt.

To Find out: The recording conversion of the 6% convertible bonds into common stock using the book value method and market value method, it would be affect earnings, how much amount would be differ.

2.

To determine

To Explain: The 7% bonds issued at a face value, or discount or premium.

3.

To determine

To Explain: The amount of interest expense for the 7% bonds be higher in the first year or second year of the term to maturity.

4.

To determine

To Explain: The gain or loss on early extinguishment of debt would be determined. Does the early extinguishment of the 7% bonds result in gain or loss?

Expert Solution & Answer

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Answer 4

Question

Chapter 14, Problem 14.11BYP

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Early Extinguishment debt

When the debt obligations are retired before its scheduled maturity date, the transactions are referred to as early extinguishment of debt. The debt is paid at the market price of the debt and for any difference between the book value of the debt with its market price; the business recognizes the gain or loss on early extinguishment of the debt.

To Find out: The recording conversion of the 6% convertible bonds into common stock using the book value method and market value method, it would be affect earnings, how much amount would be differ.

2.

To determine

To Explain: The 7% bonds issued at a face value, or discount or premium.

3.

To determine

To Explain: The amount of interest expense for the 7% bonds be higher in the first year or second year of the term to maturity.

4.

To determine

To Explain: The gain or loss on early extinguishment of debt would be determined. Does the early extinguishment of the 7% bonds result in gain or loss?

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Answer 5

Chapter 14, Problem 14.11BYP

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Early Extinguishment debt

When the debt obligations are retired before its scheduled maturity date, the transactions are referred to as early extinguishment of debt. The debt is paid at the market price of the debt and for any difference between the book value of the debt with its market price; the business recognizes the gain or loss on early extinguishment of the debt.

To Find out: The recording conversion of the 6% convertible bonds into common stock using the book value method and market value method, it would be affect earnings, how much amount would be differ.

2.

To determine

To Explain: The 7% bonds issued at a face value, or discount or premium.

3.

To determine

To Explain: The amount of interest expense for the 7% bonds be higher in the first year or second year of the term to maturity.

4.

To determine

To Explain: The gain or loss on early extinguishment of debt would be determined. Does the early extinguishment of the 7% bonds result in gain or loss?

Answer 6

Chapter 14, Problem 14.11BYP

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Early Extinguishment debt

When the debt obligations are retired before its scheduled maturity date, the transactions are referred to as early extinguishment of debt. The debt is paid at the market price of the debt and for any difference between the book value of the debt with its market price; the business recognizes the gain or loss on early extinguishment of the debt.

To Find out: The recording conversion of the 6% convertible bonds into common stock using the book value method and market value method, it would be affect earnings, how much amount would be differ.

Answer 7

Chapter 14, Problem 14.11BYP

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Early Extinguishment debt

When the debt obligations are retired before its scheduled maturity date, the transactions are referred to as early extinguishment of debt. The debt is paid at the market price of the debt and for any difference between the book value of the debt with its market price; the business recognizes the gain or loss on early extinguishment of the debt.

To Find out: The recording conversion of the 6% convertible bonds into common stock using the book value method and market value method, it would be affect earnings, how much amount would be differ.

Answer 8

2.

To determine

To Explain: The 7% bonds issued at a face value, or discount or premium.

Answer 9

2.

To determine

To Explain: The 7% bonds issued at a face value, or discount or premium.

Answer 10

3.

To determine

To Explain: The amount of interest expense for the 7% bonds be higher in the first year or second year of the term to maturity.

Answer 11

3.

To determine

To Explain: The amount of interest expense for the 7% bonds be higher in the first year or second year of the term to maturity.

Answer 12

4.

To determine

To Explain: The gain or loss on early extinguishment of debt would be determined. Does the early extinguishment of the 7% bonds result in gain or loss?

Answer 13

4.

To determine

To Explain: The gain or loss on early extinguishment of debt would be determined. Does the early extinguishment of the 7% bonds result in gain or loss?

Answer 14

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Answer 15

Expert Solution & Answer

Answer 16

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Answer 17

Ch. 14 - How is periodic interest determined for...Ch. 14 - As a general rule, how should long-term...Ch. 14 - How are bonds and notes the same? How do they...Ch. 14 - What information is contained in a bond indenture?...Ch. 14 - On January 1, 2018, Brandon Electronics issued 85...Ch. 14 - How is the price determined for a bond (or bond...Ch. 14 - A zero-coupon bond pays no interest. Explain.Ch. 14 - Prob. 14.8Q Ch. 14 - Compare the two commonly used methods of...Ch. 14 - Prob. 14.10Q

Solution Summary: The author explains the difference between the book value and the market value of the debt.

To Explain: The 7% bonds issued at a face value, or discount or premium.

To Explain: The amount of interest expense for the 7% bonds be higher in the first year or second year of the term to maturity.

To Explain: The gain or loss on early extinguishment of debt would be determined. Does the early extinguishment of the 7% bonds result in gain or loss?

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Chapter 14 Solutions