Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Chapter 8, Problem 8.8AE
To determine
Introduction:The straight line amortization is defined as the method that is involved in charging the cost to expense of an intangible asset over the consistent rate of time. The intangible assets are not consumed at an accelerated rate.
To calculate: The
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Bonds that may be redeemed prior to maturity at the option of the issuer are called
a. early retirement bonds
b. options
c. callable bonds
d. debentures
A serial bond repayment plan involves a(n)
Group of answer choices
A. series of installments to retire the debt over the life of the issue.
B. early redemption of all debt.
C. lump-sum payment at maturity.
D. conversion of debt to common stock.
Suppose serials bonds with face value of P1,000,000 scheduled to be retired on December 31, 2024 are retired at 104 on December 31, 2022, two years prior to their redemption date, what amount should Elizabeta report in its 2022 income statement as gain (loss) on early extinguishment of debt?
Chapter 8 Solutions
Advanced Financial Accounting
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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Similar questions
- Which one of the following is not a likely to be a non current liabilities? A. 10 year bond issued recently B. Convertible bond issued last week with a conversion option at the end of 5 years. C. Advanced received from the customersarrow_forwardProblem is attached* How much interest income should be reported in 2019? On December 31, 2020, the bond investment should be reported at what amount? If bonds are sold on July 1, 2021 for P5,900,000, how much gain or loss on sale should Spark recognize?arrow_forwardOn January 1, 2019, Assarain Concrete issued bonds with a face value of OMR 100,000 at 97, due in January 1, 2029. On January 1, 2025, the entire issue was retired at 100 and cancelled. How much is the gain or loss from retirement of bonds? a. Loss RO 900 b. Loss RO 1,200 c. Gain RO 1,200 d. Gain RO 900arrow_forward
- Refer to the information in RE13-5. Assume that on December 31, 2019, the investment in Smith Corporation bonds has a market value of 12,500. Prepare the year-end journal entry to record the unrealized gain or loss.arrow_forwardInvestment in Available-for-Sale Bonds The following information relates to Starr Companys investment in available-for-sale bonds for 2019: Required: 1. Prepare journal entries to record the previous information for 2019. Use the effective interest method and round all amounts to the nearest dollar. Assume that Starr prepares semiannual financial statements. 2. Show the items of income or loss from investment transactions that Starr reports for each 2019 semiannual income statement. 3. Show how the investment items are reported on each of the 2019 semiannual balance sheets, assuming that management expects to dispose of all investments with in one year of purchase.arrow_forward1. Anton wants to have a portion of ownership of a certain company. Which of the following should he invest? A. Annuity B. Bonds C. Shares D. Stocks 2. What writtwn contract is exhibited by a debtor that is legally binding which stipulates the amount borrowed at a specified tine in the future? A. Stocks B. Annuity C. Amortization D. Bonds 3. Which of the following covers when the frequency of the regular payment is different from the frequency of interest conversion? A. Bonds B. Ammortilation C. General annuity D. Simple annuity 4. What term is refers to the type of arrangement where composition is important but not order? A. Courting B. Permutation C. Multiplication rulw D. Combination 5. If p q is a tautology, then what can you inter about p and q? A. P and Q are either true or false but not both B. P and Q are always false C. P and Q are always true D. P and Q are either both true or false both falsearrow_forward
- Which statement is correct when the effective-interest method is used to amortize bond premium or discount? Group of answer choices The interest expense increases each period if the bonds were issued at a premium. The carrying amount at the end of the first year would be highest if the bonds were issued at a discount. The periodic amortization will increase regardless of whether the bonds were issued at either a discount or a premium. The periodic amortization will increase or decrease depending on whether the bonds were issued at a premium or at a discount.arrow_forwardhe following partial amortization schedule is available for Carla Vista Co. who sold $600000, 5-year, 10% bonds on January 1, 2020 for $624000 and uses annual straight-line amortization. BOND AMORTIZATION SCHEDULE Interest Periods Interestto be paid Interestexpense PremiumAmortization UnamortizedPremium Bond CarryingValue January 1, 2020 $24000 $624000 January 1, 2021 (i) (ii) (iii) (iv) (v) Which of the following amounts should be shown in cell (ii)?. $64800 $48000 $62400 $55200arrow_forwardAn investor purchased debt investments at amortized cost on January 1. Annual interest was received on December 31. The investor’s interest income for the year would be lower than the annual interest received if the debt instrument was purchased at: a discount. a premium. C. par. D. face value.arrow_forward
- Callable bonds are the bonds which are redeemed after fixed no. of years. T/F?arrow_forwardPresented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are classified as available-for-sale. 12/31/20 12/31/21 12/31/22 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, 2020. 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, 2021.arrow_forwardThe Titan retires a $24.7 million bond issue when the carrying value of the bonds is $21.9 million, but the market value of the bonds is $28.1 million. The entry to record the retirement will include: Multiple Choice A credit of $6.2 million to a gain account. No gain or loss on retirement. A credit to cash for $21.9 million. A debit of $6.2 million to a loss account.arrow_forward
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