Question: Lending to a Parent: Extra Caution Needed? Pyne Inc. is the parent of Syne Inc., a 100%-owned subsidiary created many years ago. Pyne is a

Lending to a Parent: Extra Caution Needed? Pyne Inc. is the parent of Syne Inc., a 100%-owned subsidiary created many years ago. Pyne is a holding company in the process of issuing debenture bonds to the public through an investment banking firm (the underwriter). The bond proceeds will be lent to Syne under a lending agreement having the same interest rate and repayment terms of the bond offering (this use of proceeds information is disclosed in the bond offering prospectus).

1 What financial statements do you think should be provided to potential bond investors for their review before buying tbe bonds? Wby?

2 Can you think of any special concerns that potential bond investors should have because of the existence of the parent-subsidiary form of organization instead of a home office-branch form of organization?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Modern Advanced Accounting Questions!

Bob Lin and Celia Juarez own World of Copiers and sell photocopy materials to small businesses. To increase sales, Bob and Celia decided to attend a seminar sponsored by Sales Trainers. This company...

I've attached the quesiton as a word file, thanks! JWCL165_c11_506-567.qxd 8/12/09 7:54 AM Page 506 11 Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings Chapter STUDY...

need answer for these questions 13, 17, 19, 20, and 23? PART 5 Business Valuations Chapter Business Valuations A valuation analyst should be able to explain and defend his or her valuation, including...

need answers for questions 13, 17, 19, 20, and 23? PART 5 Business Valuations Chapter Business Valuations A valuation analyst should be able to explain and defend his or her valuation, including both...

PLEASE HELP WITH AN INTRODUCTION and Conclusion!! Thank you so much INTRO Use the introduction to state the focus or purpose of your analysis as well as to define the companys SBUs and the date of...

The discussion will focus on management decision-making and control in two companies, American corporation Amazon.com, Inc. and Chinese company Alibaba Group Holding Limited. Decision-making and...

Hello I am in need of some assistance with an assignment: APA formatted Grammer and Spelling is key Read Brewing Up Controversy: A Case Exploring the Ethics of Corporate Tax Planning Written...

See attached the case study for below questions. CASE REQUIREMENTS 1. What principles are involved in this situation? Start with not only the written standards that apply to this situation (i.e., the...

Identify on the income statement (attachment A) the items affected by each of the tax avoidance methods ISSUES IN ACCOUNTING EDUCATION Vol. 30, No. 4 2015 pp. 311-327 American Accounting Association...

.I SELECTED ! Schedule D:Net Long-Term Capital Gains or Losses only its a team work. I need in 3-4 just just scehdule D I. Title: Preparation of a Corporate Income Tax Return Using IRS Form 1120 II....

Please help with coming up with an introduction for this case. Can be put into bullet points on items to discuss. Thank you! Use the introduction to identify the company to be analyzed. In addition,...

Given a simple Keynesian model of national income (Y=C+I) Where: Y=Kshs. 7,500 C= 1000 +0.8Y I= 500 AI= 100 (i) Calculate equilibrium income and consumption befor the change in investment (ii)...

At most movie theaters, one employee sells tickets and another employee collects them. One night, when youre at the movies, your friend comments that this is a waste of the theaters money. Required:...

10. LO.2 Which, if any, of these items would be considered a second class of stock for an S corporation? a. Short-term unwritten advances from a shareholder that do not exceed $10,000 in the...

What advantages are provided through the use of: (a) special journals, (b) subsidiary ledgers, and (c) the voucher system?

When a parent company uses the equity method to account for an investment in a subsidiary, why do both the parents Net Income and Retained Earnings account balances agree with the consolidated totals?

Several years ago, Jenkins Company acquired a controlling interest in Lambert Company. Lambert recently borrowed $100,000 from Jenkins. In consolidating the financial records of these two companies,...

Benns adopts the equity method for its 100 percent investment in Waters. At the end of six years, Benns reports an investment in Waters of $920,000. What figures constitute this balance?

IKS submits the following data from the post-closing trial balance for fiscal year 2021. Insurance payable 15 000 Accumulated depreciation - plant 34 200 Inventory of goods 32 000 Prepaid advertising...

Tresnan Brothers is expected to pay a $1.10 per share dividend at the end of the year (i.e., D 1 = $1.10). The dividend is expected to grow at a constant rate of 4% a year. The required rate of...

Whenever feasible, cash handling activities and cash record-keeping activities should be assigned to different employees, according to the internal control activity called ____________________.