Question
In: Accounting
What effect do Held to Maturity Bonds have on Net income? What effect do trading securities...
What effect do Held to Maturity Bonds have on Net income?
What effect do trading securities have on Net Income?
What effect does an Available for sale debt security have on Net Income?
What effect does an Equity Investment have on Net Income?
Solutions
Expert Solution
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| What effect do Held to Maturity Bonds have on Net income? |
| Held to Maturity Bonds only impact net income when dividends/interest are received. These are not revalued at the end of the every financial year but in case of major decline in cost the impact will be shown as impairment loss and to be adjusted with Net Income after adjusting with any available revaluation surplus first. |
| What effect do trading securities have on Net Income? |
| Trading securities impact net income when dividends/interest are received. These have to be revalued at the end of the every financial year and the revaluation gain or loss will be adjusted to Net Income. |
| What effect does an Available for sale debt security have on Net Income? |
| Available for sale debt security only impact net income when dividends/interest are received. These have to be revalued at the end of the every financial year but the revaluation gain or loss will not be adjusted to Net Income but rather shown separately as Other Comprehensive income. When these are finally sold then the gain or loss will be adjusted with net income. |
| What effect does an Equity Investment have on Net Income? |
| Any type of return from Equity Investment like interest or dividend will be adjusted from investment amount only and will not impact net Income. |
ekkarill92 answered 1 year agoRelated Solutions
Discuss the similarities and differences in reporting trading securities, available-for-sale securities and held-to-maturity securities.
Discuss the similarities and differences in reporting trading
securities, available-for-sale securities and held-to-maturity
securities.
Securities held-to-maturity, securities available for sale, and trading securities Amalgamated General Corporation is a consulting firm...
Securities held-to-maturity, securities available for sale, and
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Amalgamated General Corporation is a consulting firm that also
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time the company buys and sells securities intending to earn
profits on short-term differences in price. The following selected
transactions relate to Amalgamated’s investment activities during
the last quarter of 2016 and the first month of 2017. The only
securities held by Amalgamated at October 1 were $30 million of 10%
bonds...
Securities held-to-maturity, securities available for sale, and trading securities Amalgamated General Corporation is a consulting firm...
Securities held-to-maturity, securities available for sale, and
trading securities
Amalgamated General Corporation is a consulting firm that also
offers financial services through its credit division. From time to
time the company buys and sells securities intending to earn
profits on short-term differences in price. The following selected
transactions relate to Amalgamated’s investment activities during
the last quarter of 2016 and the first month of 2017. The only
securities held by Amalgamated at October 1 were $30 million of 10%
bonds...
On December 31, 2019, Sumner Company held Wall Company bonds in its portfolio of trading securities....
On December 31, 2019, Sumner Company held Wall Company bonds in
its portfolio of trading securities. The bonds have a par value of
$40,000, carry a 10% annual interest rate, mature in 2026, and had
originally been purchased at par. The market value of the bonds on
December 31, 2019 was $38,000.
On January 1, 2020, Sumner acquired bonds of Doherty Company
with a par value of $30,000 for $30,200. The Doherty Company bonds
carry an annual interest rate of...
On December 31, 2019, Sumner Company held Wall Company bonds in its portfolio of trading securities....
On December 31, 2019, Sumner Company held Wall Company bonds in
its portfolio of trading securities. The bonds have a par value of
$40,000, carry a 10% annual interest rate, mature in 2026, and had
originally been purchased at par. The market value of the bonds on
December 31, 2019 was $38,000.
On January 1, 2020, Sumner acquired bonds of Doherty Company
with a par value of $30,000 for $30,200. The Doherty Company bonds
carry an annual interest rate of...
What is the difference between a trading security, available-for-sale, and held-to-maturity investment? What is the equity...
What is the difference between a trading security,
available-for-sale, and held-to-maturity investment? What is the
equity approach? When must entities consolidate their financial
statements?
Oriole Corporation has municipal bonds classified as a held-to-maturity at December 31, 2020. These bonds have...
Oriole Corporation has municipal bonds classified as a
held-to-maturity at December 31, 2020. These bonds have a par value
of $766,000, an amortized cost of $766,000, and a fair value of
$688,000. The company believes that impairment accounting is now
appropriate for these bonds.
Prepare the journal entry to recognize the impairment
What is the new cost basis of the municipal bonds?
Given that the maturity value of the bonds is $766,000, should
Oriole Corporation amortize the difference between the...
Midwest Bank invests in trading securities. At the beginning of December 2018, the bank held no...
Midwest Bank invests in trading securities. At the beginning of
December 2018, the bank held no trading securities. During December
of 2018, it entered into the following trading securities
transactions:
Dec.
10
Purchased 500 shares of Carroll
Company common stock for $76 per share.
Dec.
21
Purchased 800 shares of Dynamo
Company common stock for $34 per share.
At the end of December, the Carroll Company common stock had a
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7. What effect would each of the following have on net income - increase or decrease?...
7.
What effect would each of the following have on net income -
increase or decrease?
a) Decreasing estimated salvage value of equipment
b) Writing off obsolete inventory
c) Underestimating warranty claims
d) Accruing a contingent liability for an ongoing lawsuit
1 8.
Which earnings per share figures must be disclosed on the face
of an income statement of a public company?
1 9.
How would each of the following be reported in the income
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1. What is the yield to maturity on the following bonds; all have a maturity of...
1.
What is the yield to maturity on the following bonds; all have a
maturity of 10 years, a face value of 2000, and a coupon rate of 4
percent (paid semiannually). The bond's current prices are:
a. $1,180
b. $ 2,400
c. Explain the relationship between yield to maturity and bond
prices.
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