GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
17th Edition
ISBN: 9781260218831
Author: Libby
Publisher: MCG CUSTOM
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Chapter A, Problem 1P
1.
To determine
Indicate the accounts that are effected in the books of the investor, by the purchase of bonds held-to-maturity on July 1.
2.
To determine
Indicate the accounts that are effected in the books of the investor, by the receipt of interest on December 31, from the investment in bonds held-to-maturity.
3.
To determine
Explain whether Corporation S should record the
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Accounting for debt investments
League Up & Co. owns vast amounts of corporate bonds. Suppose League Up buys $900,000 of CocoCorp bonds at face value on January 2, 2018. The CocoCorp bonds pay interest at the annual rate of 8% on June 30 and December 31 and mature on December 31, 2022. League Up intends to hold the investment until maturity.
Requirements
How would the bond investment be classified on League up’s December 31, 2018, balance sheet?
Journalize the following on League Up’s books:
a. Receipt of final interest payment, on December 31, 2022.
b. Disposition of the investment at maturity on December 31, 2022.
WORK
Check my work
Tanner-UNF Corporation acquired as an investment $235 million of 8% bonds, dated July 1, on July 1, 2024. Company
management is holding the bonds in its treding portfolio. The market interest rate (yield) was 10% for bonds of similar risk and
maturity. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December
31. As a result of changing market conditions, the fair value of the bonds at December 31, 2024, was $215 million.
Required:
1. & 2. Prepare the journal entry to record Tanner-UNF's Investment in the bonds on July 1, 2024 and interest on December 31,
2024, at the effective (merket) rate.
3. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2024, balance
sheet
4. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment
on January 2, 2025, for $180 milion. Prepare the journal entries…
PROBLEM E:
You were engaged by SKT Company for the first time on February 15, 2018, to audit their financial statements
as of and for the year ended December 31, 2017. In auditing their investment accounts, you decided to review
the transactions and entries related to an investment in debt securities.
On January 2, 2016, SKT acquired a 5-year 10% bond with a face value of P5,000,000 for P4,800,000. The entity
incurred direct costs for P15,500, resulting to a yield rate of 11%. The business model of the entity for investing
in debt securities is to collect contractual cash flows in the form of principal and interest on the outstanding
principal, and to sell the financial assets.
The bonds are quoted at 101 on December 31, 2016; 97 on December 31, 2017; and 99 on December 31, 2018.
By the end of 2017, the balances in the statement of financial position of their Financial Asset – FVOCI and the
related unrealized holding gain – OCI are P4,850,000 and P50,000, respectively. The entries…
Chapter A Solutions
GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
Ch. A - Prob. 1QCh. A - Explain the difference in accounting methods used...Ch. A - Explain how bonds held to maturity are reported on...Ch. A - Explain the application of the cost principle to...Ch. A - Under the fair value method, when and how does the...Ch. A - Under the equity method, why does the investor...Ch. A - Prob. 7QCh. A - Prob. 8QCh. A - Prob. 9QCh. A - Company X owns 40 percent of Company Y and...
Ch. A - Prob. 2MCQCh. A - Dividends received from stock that is reported as...Ch. A - Prob. 4MCQCh. A - Prob. 5MCQCh. A - When using the equity method of accounting, when...Ch. A - Prob. 7MCQCh. A - Prob. 8MCQCh. A - Which of the following is true regarding the...Ch. A - Prob. 10MCQCh. A - Matching Measurement and Reporting Methods Match...Ch. A - Prob. 2MECh. A - Prob. 3MECh. A - Prob. 4MECh. A - Prob. 5MECh. A - Prob. 6MECh. A - Prob. 7MECh. A - Prob. 8MECh. A - Prob. 9MECh. A - Prob. 10MECh. A - Prob. 11MECh. A - Prob. 1ECh. A - Prob. 2ECh. A - Recording Transactions in the Available-for-Sale...Ch. A - Prob. 4ECh. A - Prob. 5ECh. A - Reporting Gains and Losses in the Trading...Ch. A - Prob. 7ECh. A - Prob. 8ECh. A - Prob. 9ECh. A - Prob. 10ECh. A - Prob. 11ECh. A - Prob. 1PCh. A - Prob. 2PCh. A - Prob. 3PCh. A - Prob. 4PCh. A - Prob. 5PCh. A - Comparing Methods to Account for Various Levels of...Ch. A - Prob. 7PCh. A - Recording Investments for Significant Influence LO...Ch. A - Prob. 9PCh. A - Prob. 10PCh. A - Prob. 11PCh. A - Prob. 1APCh. A - Prob. 2APCh. A - Reporting Passive Investments During January 2017,...Ch. A - Prob. 4APCh. A - Prob. 5APCh. A - Prob. 6APCh. A - Prob. 1CONCh. A - Finding Financial Information Refer to the...Ch. A - Prob. 2CPCh. A - Prob. 3CPCh. A - Prob. 4CPCh. A - Prob. 5CPCh. A - Prob. 6CP
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