ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Textbook Question
Chapter 8, Problem 8.4E
Evaluation of Intercorporate Bond Holdings (Effective Interest Method)
Proctor Corporation purchased bonds of its subsidiary from a nonaffiliated during 20X6. Although Proctor purchased the bonds at par value, a loss on bond retirement is reported in the 20X6 consolidated income statement as a result of the purchase.
Required
- Were the bonds originally sold by the subsidiary at a premium or a discount? Explain.
- Will the annual interest payments? Proctor receives be more or less than the interest expense the subsidiary records each period? Explain.
- As a result of the entry recorded at December 31, 20X7, to eliminate the effects of the intercompany bond holding, will consolidated net income be increased or decreased? Explain.
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Students have asked these similar questions
uses the effective interest method of amortization. In its
December 31, 2003 balance sheet, what amount should York
report as investment in bonds?
a. 911,300
b. 916,600
c. 953,300
d. 960,600
(AICPA)
Use the following information for the next three questions:
On Jan. 1, 20x1, Koong Co. acquired 100, P5,000 face amount, 10%,
3-year 'term' bonds of King Co. for P428,567. Koong incurred
transaction costs of P25,000 on the acquisition. The effective
interest rate adjusted for the transaction costs is 14%. The bonds
were quoted at 102 on Dec. 31, 20x2.
2. How much are the interest income in 20x2 and the carrying
amount of the bonds on Dec. 31, 20x2 if the bonds are held
under a “hold to collect" business model?
a. 65,389; 482,455
b. 65,389; 510,000
c. 55,276; 472,834
d. 50,000; 453,567
3. How much are the interest income in 20x2 and the carrying
amount of the bonds on Dec. 31, 20x2 if the bonds are held
under a “hold to collect and sell" business model?
a. 65,389; 482,455
c. 50,000; 428,567…
Bonds Payable has a balance of $987,000 and Premium on Bonds Payable has a balance of $10,857. If the issuing corporation redeems the bonds at 102, what is the amount of gain or loss on redemption?
Select the correct answer.
a-$10,857 loss
b-$8,883 gain
c-$10,857 gain
d-$8,883 loss
in the current year largo company purchased bonds on macdermont corporation with a cost of 125000 and a year end fair value of 127000 these are classified as long term available for sale debt securities prepare the journal entry to record any necessary fair value adjustment to the debt investments of december 31
Chapter 8 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
Ch. 8 - Prob. 8.1QCh. 8 - What is meant by a constructive bond retirement in...Ch. 8 - Prob. 8.3QCh. 8 - Prob. 8.4QCh. 8 - When a parent company sells land to a subsidiary...Ch. 8 - Prob. 8.7QCh. 8 - Prob. 8.8QCh. 8 - Prob. 8.9QCh. 8 - Prob. 8.10QCh. 8 - Prob. 8.11Q
Ch. 8 - How is the amount of income assigned to the...Ch. 8 - Prob. 8.13QCh. 8 - How would the relationship between interest income...Ch. 8 - Prob. 8.15QCh. 8 - Prob. 8.16QCh. 8 - Prob. 8.17QCh. 8 - Prob. 8.18QCh. 8 - Prob. 8.1CCh. 8 - Prob. 8.2CCh. 8 - Prob. 8.4CCh. 8 - Prob. 8.1ECh. 8 - Bond Sale from Parent to Subsidiary (StraightLine...Ch. 8 - Computation of Transfer Price (Effective Interest...Ch. 8 - Prob. 8.2AECh. 8 - Prob. 8.3ECh. 8 - Bond Sale at Discount (Straightline Method) Assume...Ch. 8 - Evaluation of Intercorporate Bond Holdings...Ch. 8 - Prob. 8.5.1ECh. 8 - Prob. 8.5.2ECh. 8 - MultipleChoice Questions (Effective Interest...Ch. 8 - Prob. 8.5.4ECh. 8 - Prob. 8.5.5ECh. 8 - Prob. 8.5.6ECh. 8 - Prob. 8.5.1AECh. 8 - Prob. 8.5.2AECh. 8 - Prob. 8.5.3AECh. 8 - Prob. 8.5.4AECh. 8 - Prob. 8.6.1ECh. 8 - Prob. 8.6.2ECh. 8 - MultipleChoice Questions (Effective Interest...Ch. 8 - Prob. 8.6.1AECh. 8 - Prob. 8.6.2AECh. 8 - Prob. 8.6.3AECh. 8 - Prob. 8.7ECh. 8 - Prob. 8.7AECh. 8 - Prob. 8.8ECh. 8 - Prob. 8.8AECh. 8 - Prob. 8.9ECh. 8 - Prob. 8.9AECh. 8 - Prob. 8.10ECh. 8 - Prob. 8.10AECh. 8 - Prob. 8.11ECh. 8 - Prob. 8.11AECh. 8 - Evaluation of Bond Retirement (Effective Interest...Ch. 8 - Prob. 8.12AECh. 8 - Prob. 8.13ECh. 8 - Prob. 8.13AECh. 8 - Prob. 8.14PCh. 8 - Prob. 8.14APCh. 8 - Prob. 8.15PCh. 8 - Prob. 8.15APCh. 8 - Prob. 8.16PCh. 8 - Prob. 8.16APCh. 8 - Prob. 8.17PCh. 8 - Prob. 8.17APCh. 8 - Prob. 8.18PCh. 8 - Prob. 8.18APCh. 8 - Prob. 8.19APCh. 8 - Prob. 8.20PCh. 8 - Prob. 8.20APCh. 8 - Prob. 8.21PCh. 8 - Prob. 8.21APCh. 8 - Prob. 8.22APCh. 8 - Prob. 8.22BPCh. 8 - Prob. 8.23PCh. 8 - Prob. 8.23APCh. 8 - Prob. 8.24PCh. 8 - Prob. 8.24APCh. 8 - Intercorporate Inventory and Debt Transfers...Ch. 8 - Intercorporate Inventory and Debt Transfers...Ch. 8 - Prob. 8.26PCh. 8 - Prob. 8.26APCh. 8 - Prob. 8.27.1BPCh. 8 - Prob. 8.27.2BPCh. 8 - Prob. 8.27.3BPCh. 8 - Prob. 8.27.4BPCh. 8 - Prob. 8.27.5BPCh. 8 - Prob. 8.27.6BPCh. 8 - Prob. 8.27.7BPCh. 8 - Prob. 8.27.8BPCh. 8 - Prob. 8.27.9BPCh. 8 - Prob. 8.27.10BPCh. 8 - Prob. 8.28PCh. 8 - Prob. 8.28APCh. 8 - Prob. 8.29BPCh. 8 - Prob. 8.30BP
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