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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€ 17.4 (L01) (Debt Investments) Assume the same information as in E17.3 (in the picture)except that Roosevelt has an active trading strategy for these bonds. The fair value of the bonds at December 31 of each year end is as follows. 2019 $ 534.200 2020 $ 515,000 2021 $ 513,000 2022 $ 517,000 2023 $ 500,000 Instructions a. Prepare the journal entry at the date of the bond purchase. b. Prepare the journal entries to record the interest received and recognition of fair value for 2019. c. Prepare the journal entry to record the recognition of fair value for 2020. d. Discuss how the response to (c) will be different assuming Roosevelt has a strategy of held-for-collection and selling.

P 10–6 A 3‐year $1,000,000, 10% bond issue was authorized for Mega Corporation on April 1, 2019. Interest is payable on March 31 and September 30. The year‐end of the Corporation is December 31. Required: Consider the following independent cases: 1. The Mega Corporation issued the bonds on April 1, 2019, at 97. Prepare the journal entries required on April 1, 2019, September 30, 2019, and December 31, 2019. Assume straight‐line amortization. 2. The bonds are issued at 106 on April 1, 2019. Prepare the journal entries to record the sale of the bonds on April 1, 2019, and entries required on September 30, 2019, and December 31, 2019 3. The bonds are not issued

Problem 12.9 (Algo) Securities held-to-maturity; trading securities and equity investments [LO12-1, 12-2, 12-3, 12-5] Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities. The following selected transactions relate to Amalgamated's investment activities during the last quarter of 2021 and the first month of 2022. The only securities held by Amalgamated at October 1, 2021 were $32 million of 10% bonds of Kansas Abstractors, Inc. purchased on May 1, 2021 at face value and held in Amalgamated's trading securities portfolio. The company's fiscal year ends on December 31. 2021 Oct. 18 Purchased 2 million shares of Millwork Ventures Company common stock for $55 million. Millwork has a total of 32 million shares issued. 31 Received semiannual interest of $1.6 million from the Kansas Abstractors bonds. Nov. 1 Purchased 10% bonds of Holistic Entertainment Enterprises at their…

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?

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

Expert Solution & Answer

Answer 15

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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