On July 1, 2023, Sheffield Aggregates Ltd. purchased 7% bonds with a maturity value of $135,000 for $139,738. The bonds provide the bondholders with a 6% yield. The bonds mature four years later, on July 1, 2027, with interest receivable June 30 and December 31 of each year. Sheffield uses the effective interest method to allocate unamortized discount or premium. The bonds are accounted for using the FV- OCI model with recycling. Sheffield has a calendar year end. The fair value of the bonds at December 31, 2023 and 2024, was $139,418 and $137,927, respectively. Assume fair value adjustments are recorded at year end only. Immediately after collecting interest on December 31, 2024, the bonds were sold for $137,927.

On July 1, 2023, Sheffield Aggregates Ltd. purchased 7% bonds with a maturity value of $135,000 for $139,738. The bonds provide the bondholders with a 6% yield. The bonds mature four years later, on July 1, 2027, with interest receivable June 30 and December 31 of each year. Sheffield uses the effective interest method to allocate unamortized discount or premium. The bonds are accounted for using the FV- OCI model with recycling. Sheffield has a calendar year end. The fair value of the bonds at December 31, 2023 and 2024, was $139,418 and $137,927, respectively. Assume fair value adjustments are recorded at year end only. Immediately after collecting interest on December 31, 2024, the bonds were sold for $137,927.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 15MCQ

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