Curri, Incorporated sold its 5% bonds with a maturity value of $1,000,000 on August 1, 2021. Investors
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Question:
- Curri, Incorporated sold its 5% bonds with a maturity value of $1,000,000 on August 1, 2021. Investors in the market purchased the bonds for $1,044,915 a price that would earn them a 4% yield on their investment. The difference between the stated and market rates was attributed to revised inflation expectations. The bonds mature on August 1, 2026, and pay interest semi-annually on August 1 and February 1. The bonds are callable at any time after August 1, 2023.
- Required:
- For the December 31, 2022 cash flow statement, identify the cash flows reported and the reporting category for each cash flow identified.
- Assume that Curri was unable to make the required interest payment on February 1, 2023.
- (NOTE: This assumption should not change your responses to the items above). The bondholders agreed to accept $800,000 of 2% bonds from Curri in full satisfaction of all claims relating to the 5% bonds. The 2% bonds mature on August 1, 2027, and require interest to be paid quarterly. On February 2, 2023, the 2% bonds were trading in the bond market at 77. How should Curri report the February 1, 2023 swap of the 2% bonds for the 5% bonds in its financial statements for the year ended December 31, 2023?
Related Book For
Horngrens Accounting
ISBN: 9780135359785
11th Canadian Edition Volume 2
Authors: Tracie Miller Nobles, Brenda Mattison, Ella Mae Matsumura, Carol A. Meissner, Jo Ann Johnston, Peter R. Norwood
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