On January 1, 2021, BEZOS COMPANY acquired 10%, 3-year bonds with face value of $ 2,000,000. Interest is payable semiannually every June 30 and December 31. The bonds were acquired for 104. Commission paid for the acquisition amounted to $ 54,670. After considering the transaction cost, the effective rate of the bond on initial recognition is computed at 8%. The objective of BEZOS' COMPANY business model is to collect the contractual cash flows and sell financial asset. The fair value of the investment for the next periods are the following: 6/30/2021 105 6/30/2022 102 6/30/2023 108 12/31/2021 101 12/31/2022 112 12/31/2023 120 On January 1, 2022, the bonds were sold at 107, and the company incurred transaction costs amounting to $ 20,000.

On January 1, 2021, BEZOS COMPANY acquired 10%, 3-year bonds with face value of $ 2,000,000. Interest is payable semiannually every June 30 and December 31. The bonds were acquired for 104. Commission paid for the acquisition amounted to $ 54,670. After considering the transaction cost, the effective rate of the bond on initial recognition is computed at 8%. The objective of BEZOS' COMPANY business model is to collect the contractual cash flows and sell financial asset. The fair value of the investment for the next periods are the following: 6/30/2021 105 6/30/2022 102 6/30/2023 108 12/31/2021 101 12/31/2022 112 12/31/2023 120 On January 1, 2022, the bonds were sold at 107, and the company incurred transaction costs amounting to $ 20,000.

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

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 1RE

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