PRIN.OF CORPORATE FINANCE >BI<
12th Edition
ISBN: 9781260431230
Author: BREALEY
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 30, Problem 11PS
a)
Summary Introduction
To choose: Best investment which accompanies description based on the given item.
b)
Summary Introduction
To choose: Best investment which accompanies description based on the given item.
c)
Summary Introduction
To choose: Best investment which accompanies description based on the given item.
d)
Summary Introduction
To choose: Best investment which accompanies description based on the given item.
e)
Summary Introduction
To choose: Best investment which accompanies description based on the given item.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
. Which of the following securities would be classified as marketable securities inthe current asset section of the balance sheet?a) Commercial paper, U.S. Treasury bills, land held for investment.b) Commercial paper, U.S. Treasury bills, negotiable certificates of deposit.c) Commercial paper, land held for investment, bonds with maturities in 10 years.d) U.S. Treasury bills, long-term stock investment, bonds with maturities in 10years.*
The following information is also available:
1. Current assets include cash P3,800, accounts receivables P18,500, note receivables (maturity date is on July 1,2023) P10,000 and land P12,000.
2. Long term investments include a P4,600 investment in fair value though other comprehensive income securitiesthat is expected to be sold in 2022 and a P9,000 investment in AllDay company bonds that are expected to be helduntil their December 31, 2029 maturity date.
3. Property and equipment include buildings costing P63,400, inventories costing P30,500 and equipment costingP29,600.
4. Intangible assets include patents that cost P8,200 and on which P2,300 amortization have accumulated, andtreasury shares that costs P1,800.
5. Other assets include prepaid insurance (which expires on November 30, 2022) P2,900, sinking fund for bondretirement P7,000 and trademarks that cost P5,200 and on which P1,500 amortization has accumulated.
6. Current liabilities include accounts payable P19,400, bonds payable…
The following information is also available:
1. Current assets include cash P3,800, accounts receivables P18,500, note receivables (maturity date is on July 1,2023) P10,000 and land P12,000.
2. Long term investments include a P4,600 investment in fair value though other comprehensive income securitiesthat is expected to be sold in 2022 and a P9,000 investment in AllDay company bonds that are expected to be helduntil their December 31, 2029 maturity date.
3. Property and equipment include buildings costing P63,400, inventories costing P30,500 and equipment costingP29,600.
4. Intangible assets include patents that cost P8,200 and on which P2,300 amortization have accumulated, andtreasury shares that costs P1,800.
5. Other assets include prepaid insurance (which expires on November 30, 2022) P2,900, sinking fund for bondretirement P7,000 and trademarks that cost P5,200 and on which P1,500 amortization has accumulated.
6. Current liabilities include accounts payable P19,400, bonds payable…
Chapter 30 Solutions
PRIN.OF CORPORATE FINANCE >BI<
Ch. 30 - Inventory What are the trade-offs involved in the...Ch. 30 - Prob. 2PSCh. 30 - Prob. 3PSCh. 30 - Prob. 4PSCh. 30 - Prob. 5PSCh. 30 - Prob. 6PSCh. 30 - Prob. 7PSCh. 30 - Credit policy How should your willingness to grant...Ch. 30 - Cash management Complete the passage that follows...Ch. 30 - Prob. 10PS
Ch. 30 - Prob. 11PSCh. 30 - Prob. 12PSCh. 30 - Prob. 13PSCh. 30 - Prob. 14PSCh. 30 - Credit terms Phoenix Lambert currently sells its...Ch. 30 - Prob. 16PSCh. 30 - Prob. 17PSCh. 30 - Prob. 18PSCh. 30 - Prob. 19PSCh. 30 - Prob. 20PSCh. 30 - Prob. 21PSCh. 30 - Prob. 22PSCh. 30 - Prob. 23PSCh. 30 - Prob. 24PSCh. 30 - Prob. 25PSCh. 30 - Money-market yields In Section 30-4 we described a...Ch. 30 - Money-market yields Look again at the previous...Ch. 30 - Prob. 29PSCh. 30 - Prob. 30PSCh. 30 - Prob. 31PSCh. 30 - Prob. 33PS
Knowledge Booster
Similar questions
- Victoria Company has investments in marketable securities classified as trading and available-for-sale. At the beginning of the year, the aggregate market value of each portfolio exceeded its amortized cost. During the year, Victoria sold some securities from each portfolio. At the end of the year, the aggregate amortized cost of each portfolio exceeded its market value. Victoria also has investments in bonds classified as held-to-maturity, all of which were purchased for face value. During the year, some of these bonds held by Victoria were called prior to their maturity by the bond issuer. Three months before the end of the year, additional similar bonds were purchased for face value plus 2 months accrued interest. Required: 1. Explain how Victoria accounts for: a. sale of securities from each portfolio b. each equity securities portfolio at year-end 2. Explain how Victoria accounts for the disposition prior to their maturity of the long-term bonds called by their issuer. 3. Explain how Victoria reports the purchase of the additional similar bonds at the date of the acquisition.arrow_forwardClassify the following investments. Each case is independent of the other. Investment Classifications (a) A bond that will mature in 4 years was bought 1 month ago when the price dropped. As soon as the value increases, which is expected next month, it will be sold. select an Investment Classification *Available-for-Sale Debt Securities *Held-to-Maturity Debt Securities *Trading Debt Securities *None of the above (b) 10% of the outstanding stock of Farm-Co was purchased. The company is planning on eventually getting a total of 30% of its outstanding stock. select an Investment Classification *Available-for-Sale Debt Securities *Held-to-Maturity Debt Securities *Trading Debt Securities *None of the above (c) Bonds were purchased in December of this year. The bonds are expected to be sold in January of next year. select an Investment Classification *Available-for-Sale Debt Securities…arrow_forward(Investment Classifications) For the following investments, identify whether they are:1. Trading debt securities.2. Available-for-sale debt securities.3. Held-to-maturity debt securities.4. None of the above.Each case is independent of the other.(a) A bond that will mature in 4 years was bought 1 month ago when the price dropped. As soon as the value increases, which is expected next month, it will be sold.(b) 10% of the outstanding stock of Farm-Co was purchased. The company is planning on eventually getting a total of 30% of its outstanding stock.(c) Bonds were purchased in December of this year. The bonds are expected to be sold in January of next year.(d) Bonds that will mature in 5 years are purchased. The company would like to hold them until they mature, but money has been tight recently and they may need to be sold.(e) Preferred stock was purchased for its constant dividend. The company is planning to hold the preferred stock for a long time.(f) A bond that matures in 10 years…arrow_forward
- Can you help me to calculate adjusted net income, adjusted net income if FV of security B were 285,000, value of held for trading securities as of 12/31/2020 and assuming these securities at measured at FVOCI, calculate the value of these financial assets as of 12/31/2020 Problem: ABC Corporation buys and sells securities expecting to earn profits on short term differences in price. during 2020, ABC Corporation purchased the following held for trading securities. Security A: Cost- 195,000; FV at 12/31/2020- 225,000 Security B: Cost- 300,000; FV at 12/31/2020- 162,000 Security C: Cost- 678,000; FV at 12/31/2020- 660,000 Before any adjustments related to these securities, ABC Corporation had net income of 900,000arrow_forwardThe following information is also available: 1. Current assets include cash P3,800, accounts receivables P18,500, note receivables (maturity date is on July 1, 2023) P10,000 and land P12,000. 2. Long term investments include a P4,600 investment in fair value though other comprehensive income securities that is expected to be sold in 2022 and a P9,000 investment in AllDay company bonds that are expected to be held until their December 31, 2029 maturity date. 3. Property and equipment include buildings costing P63,400, inventories costing P30,500 and equipment costing P29,600. 4. Intangible assets include patents that cost P8,200 and on which P2,300 amortization have accumulated, and treasury shares that costs P1,800. 5. Other assets include prepaid insurance (which expires on November 30, 2022) P2,900, sinking fund for bond retirement P7,000 and trademarks that cost P5,200 and on which P1,500 amortization has accumulated. 6. Current liabilities include accounts payable P19,400, bonds…arrow_forwardBato Co is currently estimating the value of its securities given the following information: Government securities currently trade at 4.5% Credit spread for Bato Co is estimated as follows based on its maturity 3 year maturity - 3.5% 4 year maturity - 5.0% 5 year maturity - 6.0% Based on current estimates the Beta of Bato is estimated at 0.75 Market risk premium for equity instruments is estimated at 6.5% The following summarizes the instruments currently issued by Bato: Bond Graphite - Php500,000 face value bond with a 5-year tenor carrying 8.0% coupon issued two years ago Bond Quartz - Php750,000 face value bond with a 4-year tenor carrying 8.0% coupon issued just today Bond Marble - Php1,000,000 face value bond with a 5-year tenor carrying a 12.0% coupon issued last year 10,000 common shares - Bato just declared a dividend of Php2.50 per share and is expected to grow by 20% over the next five years before slowing down to 5% beginning year 6 23. How much is the value of Bond…arrow_forward
- Use the following information about a hypothetical government security dealer named M.P. Jorgan. Market yields are in parenthesis, and amounts are in millions. All securities are selling at par equal to book value. (4 points) Assets Liabilities and Equity Cash $10 Overnight repos $250 1-month T-bills (7.05%) 85 Subordinated debt 3-month T-bills (7.25%) 100 7-year fixed rate (8.55%) 140 2-year T-notes (7.50%) 90 8-year T-notes (8.96%) 100 5-year munis (floating rate) (8.20% reset every 6 months) 50 Equity 45 Total assets $435 Total liabilities &…arrow_forwardhe following information is about the spot rates on Treasury securities and BBB corporate bond: Spot 1 Year Spot 2 Year Spot 3 Year Treasury 3% 4.75% 5.5% BBB Corporate Debt 7.5% 9.15% 10.5% Question: What is the implied forward rates on one-year maturity BBB corporate debt to be delivered in year 3?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_forward
- These are short-term securities issued by the U.S. government with maturities of 13 to 52 weeks: Group of answer choices Commercial paper Bankers' acceptances Treasury bills All of thesearrow_forwardFixed-income securities consist of debt instruments and preferred stock. Bonds are debt securities in which a borrower promises to pay a specified interest rate and principal at a future date. Which of the following types of bonds have the least default risk? Municipal bonds Corporate bonds Treasury bonds Based on the information given in the following statement, answer the questions that follow: In July 2009, Hungary successfully issued 1 billion euros in bonds. The transaction was managed by Citigroup. Who is the issuer of the bonds? Citigroup The Hungarian government Hungary Bank What type of bonds are these? Government bonds Corporate bonds Municipal bondsarrow_forwardSuppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2022, for $320 million. Prepare the journal entries to record the sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).) 1)Record the entry to adjust to fair value on the date of sale. 2)Record the sale of the bonds on January 2, 2022.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning