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On December 31, 2021, Danny purchased $23,000 of newly issued bonds of Howard Corporation for $19,045. The bonds are dated December 31, 2021. The bonds are 9%, 10-year bonds paying interest semiannually on June 30 and December 31. The bonds are priced to yield 12% compounded semiannually. Read the requirement. in Requirement a. What is the amount of the original issue discount? Start by completing the bond amortization table for the first year. (Round all amounts to the nearest dollar.) $17 55 50 Amortization of Original Issue Discount Taxpayers Basis Interest Income for the Bond Year Interest Received December 31, 2021 June 30, 2022 December 31, 2022 The amount of the original issue discount is Requirement b. For the first semiannual period, what is the amount of the original issue discount Danny must recognize as ordinary income? (Round the amount to the nearest dollar.) The amount of the original issue discount Danny must recognize as ordinary income for the first semiannual period is Requirement c. What is the total amount of interest income Danny must recognize in 2022? (Round the amount to the nearest dollar.) The total amount of interest Danny must recognize in 2022 is Requirement d. What is Danny's basis for the bonds as of December 31, 2022? (Round the amount to the nearest dollar.)

On December 31, 2021, Danny purchased $23,000 of newly issued bonds of Howard Corporation for $19,045. The bonds are dated December 31, 2021. The bonds are 9%, 10-year bonds paying interest semiannually on June 30 and December 31. The bonds are priced to yield 12% compounded semiannually. Read the requirement. in Requirement a. What is the amount of the original issue discount? Start by completing the bond amortization table for the first year. (Round all amounts to the nearest dollar.) $17 55 50 Amortization of Original Issue Discount Taxpayers Basis Interest Income for the Bond Year Interest Received December 31, 2021 June 30, 2022 December 31, 2022 The amount of the original issue discount is Requirement b. For the first semiannual period, what is the amount of the original issue discount Danny must recognize as ordinary income? (Round the amount to the nearest dollar.) The amount of the original issue discount Danny must recognize as ordinary income for the first semiannual period is Requirement c. What is the total amount of interest income Danny must recognize in 2022? (Round the amount to the nearest dollar.) The total amount of interest Danny must recognize in 2022 is Requirement d. What is Danny's basis for the bonds as of December 31, 2022? (Round the amount to the nearest dollar.)

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 16E
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On December 31, 2021, Danny purchased $23,000 of newly issued bonds of Howard Corporation for $19,045. The bonds are dated December 31, 2021. The bonds are 9%, 10-year bonds paying interest semiannually on June 30 and December 31. The bonds are priced to yield 12% compounded semiannually. Read the requirement. in Requirement a. What is the amount of the original issue discount? Start by completing the bond amortization table for the first year. (Round all amounts to the nearest dollar.) $17 55 50 Amortization of Original Issue Discount Taxpayers Basis Interest Income for the Bond Year Interest Received December 31, 2021 June 30, 2022 December 31, 2022 The amount of the original issue discount is Requirement b. For the first semiannual period, what is the amount of the original issue discount Danny must recognize as ordinary income? (Round the amount to the nearest dollar.) The amount of the original issue discount Danny must recognize as ordinary income for the first semiannual period is Requirement c. What is the total amount of interest income Danny must recognize in 2022? (Round the amount to the nearest dollar.) The total amount of interest Danny must recognize in 2022 is Requirement d. What is Danny's basis for the bonds as of December 31, 2022? (Round the amount to the nearest dollar.)
Transcribed Image Text:On December 31, 2021, Danny purchased $23,000 of newly issued bonds of Howard Corporation for $19,045. The bonds are dated December 31, 2021. The bonds are 9%, 10-year bonds paying interest semiannually on June 30 and December 31. The bonds are priced to yield 12% compounded semiannually. Read the requirement. in Requirement a. What is the amount of the original issue discount? Start by completing the bond amortization table for the first year. (Round all amounts to the nearest dollar.) $17 55 50 Amortization of Original Issue Discount Taxpayers Basis Interest Income for the Bond Year Interest Received December 31, 2021 June 30, 2022 December 31, 2022 The amount of the original issue discount is Requirement b. For the first semiannual period, what is the amount of the original issue discount Danny must recognize as ordinary income? (Round the amount to the nearest dollar.) The amount of the original issue discount Danny must recognize as ordinary income for the first semiannual period is Requirement c. What is the total amount of interest income Danny must recognize in 2022? (Round the amount to the nearest dollar.) The total amount of interest Danny must recognize in 2022 is Requirement d. What is Danny's basis for the bonds as of December 31, 2022? (Round the amount to the nearest dollar.)
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