Question
In: Accounting
Federal Semiconductors issued 12% bonds, dated January 1, with a face amount of $790 million on...
Federal Semiconductors issued 12% bonds, dated January 1, with a
face amount of $790 million on January 1, 2018. The bonds sold for
$734,125,169 and mature on December 31, 2037 (20 years). For bonds
of similar risk and maturity the market yield was 13%. Interest is
paid semiannually on June 30 and December 31. Federal determines
interest at the effective rate. Federal elected the option to
report these bonds at their fair value. On December 31, 2018, the
fair value of the bonds was $720 million as determined by their
market value in the over-the-counter market. Assume the fair value
of the bonds on December 31, 2019 had risen to $726 million.
Required:
Complete the below table to record the following journal
entries.
1. & 2. Prepare the journal entry to adjust
the bonds to their fair value for presentation in the December 31,
2018, balance sheet, and adjust the bonds to their fair value for
presentation in the December 31, 2019, balance sheet. Federal
determined that one-half of the increase in fair value was due to a
decline in general interest rates.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
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of similar risk and maturity the market yield was 9%. Interest is
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of similar risk and maturity the market yield was 14%. Interest is
paid semiannually on June 30 and December 31. Required: 1. to 3.
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$789,954,084 and mature on December 31, 2040 (20 years). For bonds
of similar risk and maturity the market yield was 9%. Interest is
paid semiannually on June 30 and December 31.
Required:
1. to 3. Prepare the journal entries to record
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2021 (at the effective...
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Federal Semiconductors issued 11% bonds, dated January 1, with a
face amount of $800 million on January 1, 2021. The bonds sold for
$739,814,813 and mature on December 31, 2040 (20 years). For bonds
of similar risk and maturity the market yield was 12%. Interest is
paid semiannually on June 30 and December 31.
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1. to 3. Prepare the journal entries to record
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of similar risk and maturity the market yield was 9%. Interest is
paid semiannually on June 30 and December 31. Federal determines
interest at the effective rate. Federal elected the option to
report these bonds at their fair value. On December 31, 2016, the
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paid semiannually on June 30 and December 31. Federal determines
interest at the effective rate. Federal elected the option to
report these bonds at their fair value. On December 31, 2018, the
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$767,557,868 and mature on December 31, 2037 (20 years). For bonds
of similar risk and maturity the market yield was 12%. Interest is
paid semiannually on June 30 and December 31. Federal determines
interest at the effective rate. Federal elected the option to
report these bonds at their fair value. On December 31, 2018, the
fair value...
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of similar risk and maturity the market yield was 10%. Interest is
paid semiannually on June 30 and December 31. Federal determines
interest at the effective rate. Federal elected the option to
report these bonds at their fair value. On December 31, 2018, the
fair value...
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