Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
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Question
Chapter 15, Problem 1BTN
1.
To determine
Explain whether the Controller bonus depend on the classification of the debt securities.
2.
To determine
State the criteria that the controller must use to classify the securities as held-to-maturity or available-for-sale.
3.
To determine
Explain if there is any probable mistake of classification of the securities.
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(Investment Classifications) For the following investments, identify whether they are:1. Trading debt securities.2. Available-for-sale debt securities.3. Held-to-maturity debt securities.4. None of the above.Each case is independent of the other.(a) A bond that will mature in 4 years was bought 1 month ago when the price dropped. As soon as the value increases, which is expected next month, it will be sold.(b) 10% of the outstanding stock of Farm-Co was purchased. The company is planning on eventually getting a total of 30% of its outstanding stock.(c) Bonds were purchased in December of this year. The bonds are expected to be sold in January of next year.(d) Bonds that will mature in 5 years are purchased. The company would like to hold them until they mature, but money has been tight recently and they may need to be sold.(e) Preferred stock was purchased for its constant dividend. The company is planning to hold the preferred stock for a long time.(f) A bond that matures in 10 years…
Question 4: Investments
Please note that this question has two independent parts.
Part 1:
On January 1, 2020, Hamilton Financial (HF) purchased a six-year,
$150,000 bond from Think Plane Company for $128,551. The bond offers
a 4% coupon rate and pays coupons annually on December 31 of each
year. At the time of the purchase of this bond, the market rate on
comparable securities was 7%. HF will use the following amortization
table for this bond (numbers have been rounded to the nearest decimal,
small rounding differences of up to $1 might occur):
Difference
Beginning
Ending
(FV-BV)
Date Balance Coupon Interest Balance Fair Value
1/1/2020
12/31/2020
12/31/2021
12/31/2022
12/31/2023
12/31/2024
12/31/2026
0.00
2700
-400
128,551
128,551
128,551 6,000 8,999
131,549 6,000 9,208
134,758 6,000 9,433
138,191 6,000 9,673
141,864 6,000 9,930
145,794 6,000 10,206
131,549
134,758
134,249
134,358
138,191
141,864
145,794
150,000
HF included this security in its portfolio of Available for Sale (AFS)…
Chapter 15 Solutions
Principles of Financial Accounting.
Ch. 15 - Prob. 1MCQCh. 15 - Prob. 2MCQCh. 15 - Prob. 3MCQCh. 15 - Prob. 4MCQCh. 15 - Prob. 5MCQCh. 15 - Prob. 1DQCh. 15 - Prob. 2DQCh. 15 - Prob. 3DQCh. 15 - Prob. 4DQCh. 15 - Under what conditions should investments be...
Ch. 15 - Prob. 6DQCh. 15 - Prob. 7DQCh. 15 - Prob. 8DQCh. 15 - Prob. 9DQCh. 15 - Prob. 10DQCh. 15 - Prob. 11DQCh. 15 - Prob. 12DQCh. 15 - Refer to Googles statement of comprehensive income...Ch. 15 - Prob. 14DQCh. 15 - Which of the following statements are true of...Ch. 15 - Prob. 2QSCh. 15 - Prob. 3QSCh. 15 - Kitty Company began operations in the current year...Ch. 15 - Refer to the information in QS 15-4. (1) After the...Ch. 15 - Prob. 6QSCh. 15 - Prob. 7QSCh. 15 - Prob. 8QSCh. 15 - Prob. 9QSCh. 15 - Prob. 10QSCh. 15 - Prob. 11QSCh. 15 - Prepare Tiker Companys journal entries to record...Ch. 15 - Prob. 13QSCh. 15 - Prob. 14QSCh. 15 - Prob. 15QSCh. 15 - Prob. 16QSCh. 15 - Prob. 17QSCh. 15 - Prob. 18QSCh. 15 - Debt and equity securities and short- and...Ch. 15 - Prob. 2ECh. 15 - Prepare Natura Co.s journal entries to record the...Ch. 15 - Prob. 4ECh. 15 - On December 31, Lujack Co. held the following...Ch. 15 - Prob. 6ECh. 15 - Prob. 7ECh. 15 - Prob. 8ECh. 15 - Prob. 9ECh. 15 - Prob. 10ECh. 15 - Prob. 11ECh. 15 - Prob. 12ECh. 15 - Prob. 13ECh. 15 - Selected accounts from GermX Co.s adjusted trial...Ch. 15 - Prob. 15ECh. 15 - Use the following information of Prescrip Co. to...Ch. 15 - Prob. 17ECh. 15 - Prob. 1APCh. 15 - Mead Inc. began operations in Year 1. Following is...Ch. 15 - Stoll Co.s long-term available-for-sale portfolio...Ch. 15 - Rose Company had no short-term investments prior...Ch. 15 - Prob. 5APCh. 15 - Prob. 6APCh. 15 - Prob. 1BPCh. 15 - Paris Inc. began operations in Year 1. Following...Ch. 15 - Troys long-term available-for-sale portfolio at...Ch. 15 - Prob. 4BPCh. 15 - Prob. 5BPCh. 15 - Prob. 6BPCh. 15 - Prob. 15SPCh. 15 - Prob. 1AACh. 15 - Prob. 2AACh. 15 - Prob. 3AACh. 15 - Prob. 1BTNCh. 15 - Prob. 2BTNCh. 15 - Prob. 3BTNCh. 15 - Prob. 5BTN
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