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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Question 25 On June 1, 2020, Mitchell Inc. issued 100, 8%, $1,000 bonds dated June 1, 2020 for $108,530. The bonds pay cash interest semiannually each June 30, and December 31, and were issued to yield 6%. The bonds mature May 31, 2025, and the compar uses the effective interest method to amortize bond discounts or premiums. The partial amortization schedule is as follows: Amortization schedule Cash Effective Premium Outstanding Interest Interest amortization Balance 0 06/01/20 $108.530 1 11/30/20 $4.000 $3.256 ($744) 107,786 2 05/31/21 4,000 3,234 (766) 107,020 Required: Prepare journal entries on the following dates. Round to the nearest dollar. 1. June 1, 2020, bond issuance. 2. November 30, 2020, interest payment. 3. December 31, 2020, adjusting entry. Note: You may create a table as follows to organize your journal entries. Date Account titles Debit Credit 1 Cash 10,000 Sales Revenue 10,000 Edt Format Table 12pt v Paragraoh v B I U 24 6. W R. T F G K L 2N M AV alt ctrt

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

QUESTION 5 On 1 January 2017, Entity A bought a $250,000 5.25% bond for $236,000. It incurred issue costs of $2,820. Interest is received in arrears. The bond will be redeemed at a premium over the face value on 31 December 2019. The effective interest rate is 8.75%. The fair value of the bond was as follows: 31 December 17 : $265,600 31 December 18 : $256,480 31 December 19 : $273,560 REQUIRED: (1) Measure the amounts recognised in the Statement of Financial Position for the financial asset on 31 December 2018 if Entity A originally planned to hold the bond until the redemption date. (2) Measure the amounts of Gain or Loss on remeasurement recognised in the Statement of Profit or Loss and Other Comprehensive Income for the financial asset for the year of 2018 if Entity A originally planned to hold the bond to maturity and may also sell the bond when the possibility of an investment with a higher return arises. (3) Measure the amounts of Gain or Loss on remeasurement…

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?

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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?

Expert Solution & Answer

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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