Question

In: Accounting

Strange Corporation purchased $60,400 of 6-year, 7% bonds of Kaecilius Inc. for $57,566 to yield an...

Strange Corporation purchased $60,400 of 6-year, 7% bonds of Kaecilius Inc. for $57,566 to yield an 8% return, and classified the purchase as an amortized cost method investment. The bonds pay interest semi-annually.

Required

1.      Assuming Strange Corporation applies IFRS, prepare its journal entries for the purchase of the investment and receipt of semi-annual interest and discount amortization for the first two interest payments that will be received.

2.      Assuming Strange applies ASPE and has chosen the straight-line method of discount amortization, prepare the same three entries requested in part 1.

Solutions

Expert Solution


Related Solutions

Carras Corporation purchased $60,000 of five-year, 6% bonds of Hu Inc. for $55,133 to yield an...
Carras Corporation purchased $60,000 of five-year, 6% bonds of Hu Inc. for $55,133 to yield an 8% return, and classified the purchase as an amortized cost method investment. The bonds pay interest semi-annually. (a)Assuming Carras Corporation applies IFRS, prepare its journal entries for the purchase of the investment and the receipt of semi-annual interest and discount amortization for the first two interest payments that will be received. Round amounts to the nearest dollar. (b)Assuming Carras applies ASPE and has chosen...
A company issues $17,200,000, 5.8%, 20-year bonds to yield 6% on January 1, Year 7. Interest...
A company issues $17,200,000, 5.8%, 20-year bonds to yield 6% on January 1, Year 7. Interest is paid on June 30 and December 31. The proceeds from the bonds are $16,802,426. Using straight-line amortization, what is the interest expense in Year 8 and what is the carrying value of the bonds on December 31, Year 9? Record journal entries as well
If 10-year T-bonds have a yield of 6 %, and the 10-year corporate bonds of Raytheonion...
If 10-year T-bonds have a yield of 6 %, and the 10-year corporate bonds of Raytheonion Inc. yield 9 %, the maturity risk premium on all 10-year bonds is 1.52%, and corporate bonds have a 0.48 % liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond?
Johnston, Inc. sold 10-year bonds with a 6% coupon rate to yield 5%. The face value...
Johnston, Inc. sold 10-year bonds with a 6% coupon rate to yield 5%. The face value is $400,000. The bonds pay interest semi-annually. What is the amount of cash proceeds? The cash proceeds are? Please show work on excel and show calculated formulas and use answer by using PV and/or FV table factors
On January 1, 2020, Kingbird Inc. issued $350,000 of 6-year, 3% bonds to yield a market...
On January 1, 2020, Kingbird Inc. issued $350,000 of 6-year, 3% bonds to yield a market interest rate of 4%. Interest is paid every quarter on January 1, April 1, July 1, and October 1. Kingbird has a calendar year end. After recording the December 31, 2021 accrual for quarterly interest, and making the payment on January 1, 2022, all the bonds were redeemed at 101. (a) Use Excel or a financial calculator to determine how much the company received...
On January 1, 2020, Kingbird Inc. issued $350,000 of 6-year, 3% bonds to yield a market...
On January 1, 2020, Kingbird Inc. issued $350,000 of 6-year, 3% bonds to yield a market interest rate of 4%. Interest is paid every quarter on January 1, April 1, July 1, and October 1. Kingbird has a calendar year end. After recording the December 31, 2021 accrual for quarterly interest, and making the payment on January 1, 2022, all the bonds were redeemed at 101. Prepare a bond amortization schedule for the first two years (8 interest periods). (Round...
On January 1, 2020, Kingbird Inc. issued $350,000 of 6-year, 3% bonds to yield a market...
On January 1, 2020, Kingbird Inc. issued $350,000 of 6-year, 3% bonds to yield a market interest rate of 4%. Interest is paid every quarter on January 1, April 1, July 1, and October 1. Kingbird has a calendar year end. After recording the December 31, 2021 accrual for quarterly interest, and making the payment on January 1, 2022, all the bonds were redeemed at 101. Prepare a bond amortization schedule for the first two years (8 interest periods)
Garfield Company purchased, as an available-for-sale security, $90,500 of the 8%, 7-year bonds of Chester Corporation...
Garfield Company purchased, as an available-for-sale security, $90,500 of the 8%, 7-year bonds of Chester Corporation for $81,688, which provides an 10% return. Prepare Garfield’s journal entries for (a) the purchase of the investment, (b) the receipt of annual interest and discount amortization, and (c) the year-end fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $85,975. (Round answers to 0 decimal places, e.g. 1,225. Credit account titles...
The 7​-year ​$1000 par bonds of Vail Inc. pay 8 percent interest. The​ market's required yield...
The 7​-year ​$1000 par bonds of Vail Inc. pay 8 percent interest. The​ market's required yield to maturity on a​ comparable-risk bond is 10 percent. The current market price for the bond is $ 950. a.  Determine the yield to maturity. (round to 2 decimal points) b.  What is the value of the bonds to you given the yield to maturity on a​ comparable-risk bond? (round to the nearest cent) c.  Should you purchase the bond at the current market​...
The nominal yield on 6-month T-bills is 7%, while default-free Japanese bonds that mature in 6...
The nominal yield on 6-month T-bills is 7%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 5%. In the spot exchange market, 1 yen equals $0.011. If interest rate parity holds, what is the 6-month forward exchange rate? Round the answer to five decimal places. Do not round intermediate calculations.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT