Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Question
Chapter 8, Problem 8.5.1E
To determine
Effective interest method:is used when bond is purchased at discount or premium, to record the bond interest and account for bond discount or premium, the effective interest method uses par
To choose:the correct answer
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Students have asked these similar questions
On January 1, 2020, Kevin Cosme acquired a P2,000,000, 10%
bond for P2,159,708. The ongoing interest rate on the date of the
acquisition of the bonds was 8%.Beckham classifies the bond as
financial asset at fair value through other comprehensive income
The fair value of the bonds at the end of each year is listed below
December 31, 2020
102
December 31, 2021
98
December 31, 2022
101
Determine the amount of the debt instrument at the end of year
2021 and 2022
O None of the above
O 2,040,000; 1,960,000
O 1,960,000; 2,020,000
O 2,132,484.64; 2,103,083.41
O 2,103,083.41 2,071,330.08
2. Carow SA purchased on January 1, 2019, as a held-for-
collection investment, €50,000 of the 8%, 5-year bonds of
Harrison, Inc. for €65,000, which provides a 6% return.
The bonds pay interest semiannually.
Prepare Carow's journal entries for
(a). the purchase of the investment, and
(b). the receipt of semiannual interest and premium
amortization.
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…
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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