Read the following case and use your knowledge, skills, and critical thinking to answer the questions below:

You are taking your Acc 399 training course at USA Company which has great amount of excess cash. The CFO of USA Company asked you to provide your knowledge for investing the excess cash. You suggested that the best way to invest in purchasing the bonds of other companies known as debt investments, because you believe that debt investments are safe, secure, and profitable investments.

According to your suggestion, USA Company conducting the following transaction:

- On January 1, 2018, purchased 20,000 bonds of New York Company, par value $1,800,000, 9% bonds at a price of $1,670,304. The interest is payable each January1, and the bonds mature January 1, 2023. The investment will provide USA Company a 12% yield.

Required 1:

The CFO of USA Company suggested to apply amortized cost to account for New York debt investments, what criteria should be met to apply amortized cost method?

Answer rating: 100% (QA)

Question Amortised Cest Dobrest method is Caliculated using e... View the full answer