On 1 January 2021, Entity A bought a $3,500,000, 6.25% bond for $3,456,000. It incurred issue...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On 1 January 2021, Entity A bought a $3,500,000, 6.25% bond for $3,456,000. It incurred issue costs of $1,265. Interest is received in advance. The bond will be redeemed at a discount over the face value on 31 December 2023. The effective interest rate is 8.75%. The fair value of the bond was as follows: . 31 December 2021: $3,640,000 • 31 December 2022: $3,256,000 • 31 December 2023: $3,631,000 REQUIRED: (1) Measure the amounts recognised in the Statement of Financial Position for the financial asset on 31 December 2022 if Entity A originally planned to hold the bond until the redemption date. (2) Measure the amounts of Gain or Loss on remeasurement recognised in the Statement of Profit or Loss and Other Comprehensive Income for the financial asset for the year 2022 if Entity A originally planned to hold the bond to maturity and may also sell the bond when the possibility of an investment with a higher return arises. (3) Measure the amounts of Gain or Loss on remeasurement recognised in the Statement of Profit or Loss and Other Comprehensive Income for the financial asset for the year 2022 if Entity A originally planned to trade the bond in the short term. (4) Based on (1), measure the amount of the premium/discount over the face value on 31 December 2023. ANSWERS: (1) The answer= (2) The answer= (3) The answer = $ (4) The answer = $ (If it is a gain of $10, enter 10. If it is a loss of $10, enter -10.) (If it is a gain of $10, enter 10. If it is a loss of $10, enter -10.) (If it is a premium of $10, enter 10. If it is a discount of $10, enter -10.) On 1 January 2021, Entity A bought a $3,500,000, 6.25% bond for $3,456,000. It incurred issue costs of $1,265. Interest is received in advance. The bond will be redeemed at a discount over the face value on 31 December 2023. The effective interest rate is 8.75%. The fair value of the bond was as follows: . 31 December 2021: $3,640,000 • 31 December 2022: $3,256,000 • 31 December 2023: $3,631,000 REQUIRED: (1) Measure the amounts recognised in the Statement of Financial Position for the financial asset on 31 December 2022 if Entity A originally planned to hold the bond until the redemption date. (2) Measure the amounts of Gain or Loss on remeasurement recognised in the Statement of Profit or Loss and Other Comprehensive Income for the financial asset for the year 2022 if Entity A originally planned to hold the bond to maturity and may also sell the bond when the possibility of an investment with a higher return arises. (3) Measure the amounts of Gain or Loss on remeasurement recognised in the Statement of Profit or Loss and Other Comprehensive Income for the financial asset for the year 2022 if Entity A originally planned to trade the bond in the short term. (4) Based on (1), measure the amount of the premium/discount over the face value on 31 December 2023. ANSWERS: (1) The answer= (2) The answer= (3) The answer = $ (4) The answer = $ (If it is a gain of $10, enter 10. If it is a loss of $10, enter -10.) (If it is a gain of $10, enter 10. If it is a loss of $10, enter -10.) (If it is a premium of $10, enter 10. If it is a discount of $10, enter -10.) On 1 January 2021, Entity A bought a $3,500,000, 6.25% bond for $3,456,000. It incurred issue costs of $1,265. Interest is received in advance. The bond will be redeemed at a discount over the face value on 31 December 2023. The effective interest rate is 8.75%. The fair value of the bond was as follows: . 31 December 2021: $3,640,000 • 31 December 2022: $3,256,000 • 31 December 2023: $3,631,000 REQUIRED: (1) Measure the amounts recognised in the Statement of Financial Position for the financial asset on 31 December 2022 if Entity A originally planned to hold the bond until the redemption date. (2) Measure the amounts of Gain or Loss on remeasurement recognised in the Statement of Profit or Loss and Other Comprehensive Income for the financial asset for the year 2022 if Entity A originally planned to hold the bond to maturity and may also sell the bond when the possibility of an investment with a higher return arises. (3) Measure the amounts of Gain or Loss on remeasurement recognised in the Statement of Profit or Loss and Other Comprehensive Income for the financial asset for the year 2022 if Entity A originally planned to trade the bond in the short term. (4) Based on (1), measure the amount of the premium/discount over the face value on 31 December 2023. ANSWERS: (1) The answer= (2) The answer= (3) The answer = $ (4) The answer = $ (If it is a gain of $10, enter 10. If it is a loss of $10, enter -10.) (If it is a gain of $10, enter 10. If it is a loss of $10, enter -10.) (If it is a premium of $10, enter 10. If it is a discount of $10, enter -10.) On 1 January 2021, Entity A bought a $3,500,000, 6.25% bond for $3,456,000. It incurred issue costs of $1,265. Interest is received in advance. The bond will be redeemed at a discount over the face value on 31 December 2023. The effective interest rate is 8.75%. The fair value of the bond was as follows: . 31 December 2021: $3,640,000 • 31 December 2022: $3,256,000 • 31 December 2023: $3,631,000 REQUIRED: (1) Measure the amounts recognised in the Statement of Financial Position for the financial asset on 31 December 2022 if Entity A originally planned to hold the bond until the redemption date. (2) Measure the amounts of Gain or Loss on remeasurement recognised in the Statement of Profit or Loss and Other Comprehensive Income for the financial asset for the year 2022 if Entity A originally planned to hold the bond to maturity and may also sell the bond when the possibility of an investment with a higher return arises. (3) Measure the amounts of Gain or Loss on remeasurement recognised in the Statement of Profit or Loss and Other Comprehensive Income for the financial asset for the year 2022 if Entity A originally planned to trade the bond in the short term. (4) Based on (1), measure the amount of the premium/discount over the face value on 31 December 2023. ANSWERS: (1) The answer= (2) The answer= (3) The answer = $ (4) The answer = $ (If it is a gain of $10, enter 10. If it is a loss of $10, enter -10.) (If it is a gain of $10, enter 10. If it is a loss of $10, enter -10.) (If it is a premium of $10, enter 10. If it is a discount of $10, enter -10.)
Expert Answer:
Answer rating: 100% (QA)
ANSWERS To answer the questions we need to calculate the carrying amount of the bond on December 31 2022 and determine the gain or loss on remeasurement for different scenarios Lets calculate the amou... View the full answer
Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Posted Date:
Students also viewed these accounting questions
-
QUESTION 3 Determine the lowest degree polynomial that corresponds to the following information: Degree: 6, zeros: x = 2 (multiplicity = 3); x = -1; x = 4 (multiplicity = 2) y-intercept: (0, -8) Use...
-
Hazzizzi Ltd Trial balance as at March 31, 2023 Trade receivables 22,800,000 Trade payables 6,100,000 Provision for bad debt 7,600,000 Bank 2,100,000 Cash in hand 928,000 Petty cash 203,000 Interest...
-
Old Office Building Karas Investments owns a small office building in Windhoek, from which the company operates. The Windhoek office was purchased on 1 March 2019. Karas Investments decided to move...
-
tell us about a product or service that has been a hit by changing the product's target or the company's position. And why do you think it worked
-
Suppose the capacitance of the 182-(F capacitor is reduced by a factor of 2. The two resistors are 126 and 275 , and the battery has an emf of 3.00 V. (a) Find the final value of the charge on the...
-
For the year ended December 31, 2014, Friday & Co., CPAs ("Friday"), audited the 18-4, 18-6 financial statements of Kim Company and expressed an unqualified opinion on the balance sheet only. Friday...
-
McDonald Consulting, Inc., completed the following transactions during December 2010, its first month of operations: Requirements 1. Open, or set up, T-accounts in the ledger: Cash, Accounts...
-
High-low, regression Pat Flip is the new manager of the materials storeroom for Serth manufacturing. Pat has been asked to estimate future monthly purchase costs for part #4599, used in two of Serths...
-
Final Case Project I. Given the following data on proposed capital budgeting project. Economic life of project in years. Price of New Equipment Fixed Costs Salvage value of New Equipment Effect on...
-
In this mini-case, you will complete the test of details on accounts receivable for the 2019 audit of EarthWear Clothiers, Inc. The principal test of detail involves sending "confirmations" or...
-
1. Construct DFAs that recognize the following languages over the alphabet {a,b}: (a) {w; w contains exactly two b's, or an even number of a's} (b) {ww contains as substring ababb and/or bbb }. (c)...
-
Operating Leverage Jordan s Bake Shop has a monthly target operating income of $ 2 8 , 1 2 5 . Variable expenses are 5 0 % of sales and the bakery must sell 3 , 5 0 0 units to break even. Jordan...
-
Fenster contributes property with a value of $ 1 0 0 , 0 0 0 and a basis of $ 6 0 , 0 0 0 to a partnership. One month after this contribution, the partnership makes a special distribution of $ 6 0 ,...
-
Active dry yeast and bread machine yeast were not available in stores during the coronavirus pandemic. Fleischmann's attempted to staff two shifts to produce enough active dry yeast to put some yeast...
-
A spring scale stretches 4.00 cm when a 5.00 kg mass is hung from it. What is the "k" force constant of the spring?
-
Write a program to print below pattern? 1 3 5 7 9 11 13 15 17 19
-
You notice the 9-month (ie 274 days) interest rate in the UK is 4.45%pa, whilst the interest rate in the US is 2.25%pa for the same period. You also note that the GBP/USD is 1.2781 and that the...
-
The MIT Sloan School of Management is one of the leading business schools in the U.S. The following table contains the tuition data for the masters program in the Sloan School of Management. a. Use...
-
What is the proper accounting for a wholly unperformed contract?
-
GrillMaster Inc. sells an industry leading line of outdoor charcoal and gas grills to customers through its online store as well as national home improvement stores. While the majority of the...
-
Refer to the information in E22-13. The following are independent errors made by a company that uses the periodic inventory system: a. Goods in transit, purchased on credit and shipped FOB...
-
The gross profit ratio is equal to: (a) profit divided by net sales. (b) cost of sales divided by net sales. (c) net sales minus cost of sales, divided by net sales. (d) net sales minus cost of...
-
What inventory cost flow method does Dominos Pizza Enterprises Ltd use for its inventories?
-
Which inventory cost flow method produces the highest profit in a period of rising prices?
Study smarter with the SolutionInn App