Explain how the conversion feature of convertible debthas a value (a) to the issuer and (b) to the purchaser.

Q: State the accounting guidelines for derivative financial instruments.

A: Derivative: Derivative is a financial instrument whose value is derived from the underlying…

Q: Define the term trading debt investments.

A: Investment is an asset or an item purchased today in the hope that it will generate income in the…

Q: What is meant by a bond indenture?

A: A Bond refers to an instrument that represents the loan being made by the investor to the company…

Q: The realized gain (loss) on sale of debt investments with an objective of collecting contractual…

A: Realized Gain: When an investment is sold for a greater price than it was originally acquired, this…

Q: Describe the uses of and accounting for derivatives

A: Accounting for derivatives: It is a method of recording a derivative holding of a company’s balance…

Q: Discuss the difference between debt securities market and equity securities market.

A: The Debt securities market refers to the market which trades in debt that has to be repaid to the…

Q: How is Collateralized debt obligation created. Plelase explain in details

A: Collateralized debt obligation (CDO): Collateralized debt obligation (CDO) is the bundle of loans…

Q: How much is the carrying amount/initial recognition of the bond for each of the below…

A: Given in the question: Face Value of Bond = 2,000,000 Life = 5 Years Coupon Rate = 10% Ongoing…

Q: financial asset at fair value through profit or loss a. a non derivative equity instrument b. all…

A: Solution: The following may be classified as a financial asset at fair value through profit or loss:…

Q: How does the difference between the book value of the debt and the reacquisition price represents…

A: Definition: Early extinguishment debt: When the debt obligations are retired before its scheduled…

Q: Why What kind of stream of income does a debt security pay for the duration of the security? A fixed…

A: The Answer

Q: Define debtor-in-possession (DIP) financing

A: Introduction: A debtor in possession (DIP) is an individual or company that has filed for chapter 11…

Q: GAAP requires that debt issue costs be recorded separately and amortized over the term of the…

A:

Q: Collateral may mean the acquisition of rights over either assets belonging to a borrower and/or the…

A: Collateral is a financial concept that involves using assets as a form of security in lending and…

Q: Both the sellers and buyers of debt instrument benefit by engaging in forward market or…

A: Introduction:Interest-rate forward contract - It is a contract between the parties which fix the…

Q: How to record purchase of a  debt investment? Give an example.

A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms.…

Q: Discuss the impact of the balance sheet, income sheet, and statement of CF when securitization is…

A: Securitization is the process of conversion of various financial assets asset into trading…

Q: oney market and capital market securities by giving appropriate examples.

A: Introduction : The money market as well as the capital market are the two most significant…

Q: Fair value is used to value which of the following balance sheet accounts? a. Prepaid expenses;…

A: The value of financial instruments, such as debt securities, that are traded or sold is sometimes…

Q: Differentiate between debt financing and common share finan

A: Debt financing : Debt financing the form of capital that is borrowed from outside resources. This is…

Q: Explain principal (debt)

A: Debt is the amount owed by the company for a particular period from the date of the company's…

Q: Discuss different types and characteristics of debt instruments with specific reference of Bonds.

A: Corporate bond- It is a bond issued by a company to fund its business operations, major expansions,…

Q: Define Debt Issue Costs.

A: Bonds: Bonds are a kind of interest bearing notes payable, usually issued by companies, universities…

Q: When is a gain recognized in a debt restructuring?

A: Debt restructuring is a process which the companies are using to avoid the risk of default on…

Q: What do we mean by covered interest arbitrage parity? Explain in detail by a diagram.

A: Covered interest arbitrage: It is relationship between forward premium and interest rates. If…

Q: Clearly explain the difference between debt securities market and equity securities market

A: Equity securities market is the place where equities of corporates are traded, i.e. purchased and…

Q: Explain payment-in-kind (PIK) bonds

A: A financial instrument that does not affect the ownership of the common shareholders or management…

Q: Debt Instrument investment can be classified under the following, Except?   FAFVPL At Amortized Cost…

A: Debt Instrument investment can be measured at amortised cost , Fair value through OCI & Fair…

Q: Define embedded rate (for debt)

A: An embedded option is the component of financial security the gives the issuer of the debt option or…

Q: can a convertible bond ever result in the recognition of a gain in the income statement?

A: Convertible bond: Bonds means a debt instrument issued by corporates to raise debt funds for…