Question

Khalil Ltd. purchased $ 2,000,000 of six- year, Harvest Ltd. 5.4% bonds. The bonds pay semi- annual interest each 30 June and 31 December. The market interest rate was 6% on the date of purchase. Khalil is a private company that complies with ASPE and uses straight- line amortization.

Required:
1. Calculate the price paid by Khalil Ltd.
2. Construct a table that shows interest revenue reported by Khalil and the carrying value of the investment for four interest periods. Use the straight- line method.
3. Give entries for the first four interest periods based on your calculations in requirement 2.



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  • CreatedFebruary 17, 2015
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