Question: Bali Corp has 10 000 surplus funds to invest and is
Bali Corp. has $10,000 surplus funds to invest and is considering investing in either Company A or Company B. Company A promises to return the $10,000 original amount invested in three years' time and pay a 2% annual return on the principal amount. Company B does not promise to repay the original amount invested, hut indicates that it is likely that the $10,000 investment will be worth more than $10,000 if Company B is profitable. Whether Bali will receive an annual return on the investment depends on Company B's cash flows and whether Company B's hoard of directors votes to distribute the cash. (a) Identify whether the potential investments are investments in debt or in equity securities and (h) explain how you determined your answer.
Answer to relevant QuestionsOn March 31, Ramesh Corp. invests in a $1,000, 6% bond to be held for short-term trading purposes, and accounts for this investment using the FV-NI method. The bond's fair value when acquired was $970, but an additional S1O ...A review of the financial statements of private and publicly accountable enterprises may result in finding the following measurement approaches used for their non-strategic investments: (1) cost/amortized cost, (2) FV-NI (or ...Beckett Corp. is facing a decision of whether to purchase 40% of Kyla Corp.'s shares for Si.6 million cash, giving Beckett significant influence over the investee company, or 60% of Kyla's shares for $2 .4 million cash, ...On October 1, Qilan Ltd. purchased 7% bonds with a face value of S1,OOO for trading purposes, accounting for the investment at fair value through net income. The bonds were priced at 1.044 to yield Qilan 6%, and pay interest ...Weekly Corp., a December 31 year-end company that applies IFRS, acquired an investment in 1,000 shares of Credence Corp. in mid-2010 for $29,850. Between significant volatility in the markets and in the business prospects of ...
Post your question