On January 1, 2018, Essence Communications issued $900,000 of
its 10-year, 6% bonds for $777,687. The bonds were priced to yield
8%. Interest is payable semiannually on June 30 and December 31.
Essence Communications records interest at the effective rate and
elected the option to report these bonds at their fair value. On
December 31, 2018, the market interest rate for bonds of similar
risk and maturity was 7%. The bonds are not traded on an active
exchange. The decrease in the market interest rate was due to a 1%
decrease in general (risk-free)interest rates. (FV of $1, PV of $1,
FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
Required:
1. Using the information provided, estimate the
fair value of the bonds at December 31, 2018.
2. to 4. Prepare the journal entry to record
interest on June 30, 2018 (the first interest payment), on December
31, 2018 (the second interest payment) and to adjust the bonds to
their fair value for presentation in the December 31, 2018, balance
sheet.
1.
| Present Value of the bonds | ? |
2. Record the interest expense on June 30, 2018
3. Record the interest expense on December 31, 2018
4. Record the fair value adjustment December 31, 2018
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Dim sum bonds are:
| a. |
bonds issued by non-Chinese companies in Chinese yuan in mainland China |
|
| b. |
bonds issued by non-Chinese companies in dollars in mainland China |
|
| c. |
bonds issued by Chinese companies in Chinese yuan in Brussels |
|
| d. |
bonds issued by a company (Chinese or non-Chinese) in Chinese yuan outside China |
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2. What are some of the major non-financial measurements that the firm uses.
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Q. Free fatty acids (FFA) were measured in fasting blood sample of 13 non-insulin-dependent diabetic men and 10 non-diabetic men. The results (in mmoI/L) were:
Diabetic:
430 340 560 390 430 385 345 370 317 311 687 323 618
Non-diabetic:
445 265 493 265 410 274 296 219 286 250
a) Determine if the FFA is different for diabetic men and non-diabetic men
b) Write a brief summary of what the result show
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