On October 15, 2016, Koala, Inc. issued a 10 year bond (with a typical $1000 face value) that had an annual coupon value of $60. [We are assuming that the 2020 coupon has just been redeemed.]
• Initially, the bond was sold for the premium price of $1,025.
• On October 15, 2020, this bond was selling for only $975.
• The market rate of interest for a riskless corporate bond, of this maturity, was 4.5% on October 15, 2016, which reflects market expectations about future rates of inflation.
• The market rate of interest for a riskless corporate bond, of this maturity, was 4.0% on October 15, 2020, which reflects market expectations about future rates of inflation.
Question: What was the nominal yield on this bond on October 15, 2016? [To 1 decimal place.]
In: Economics
On October 15, 2016, Koala, Inc. issued a 10 year bond (with a typical $1000 face value) that had an annual coupon value of $60. [We are assuming that the 2020 coupon has just been redeemed.]
• Initially, the bond was sold for the premium price of $1,025.
• On October 15, 2020, this bond was selling for only $975.
• The market rate of interest for a riskless corporate bond, of this maturity, was 4.5% on October 15, 2016, which reflects market expectations about future rates of inflation.
• The market rate of interest for a riskless corporate bond, of this maturity, was 4.0% on October 15, 2020, which reflects market expectations about future rates of inflation.
Question- What was the risk premium for this bond on October 15, 2016? [To 3 decimal places.]
In: Economics
Rayya Co. purchases and installs a machine on January 1, 2016, at a total cost of $142,800. Straight-line depreciation is taken each year for four years assuming a eight-year life and no salvage value. The machine is disposed of on July 1, 2020, during its fifth year of service.
Prepare entries to record the partial year’s depreciation on July 1, 2020.
Record the depreciation expense as of July 1, 2020.
Prepare entries to record the disposal under the following separate assumptions:
1. The machine is sold for $71,400 cash.|
Record the sale of machinery for $71,400 cash.
2. An insurance settlement of $59,976 is received due to the machine’s total destruction in a fire.
Record the insurance settlement received of $59,976 resulting from the total destruction of the machine in a fire.
In: Accounting
Question 2: Revised depreciation – betterment
Nova Scotia Telecom Company had a truck that was purchased on July
7, 2018, for $36000. The PPE subledger shows the following
information regarding the truck:
A customized tool carrier was constructed and permanently fitted to
the truck on July 3, 2020 at a cost of $9600 cash. The tool carrier
adds to the economic value of the truck. It will be used for the
truck’s remaining life and have a zero-residual value. The useful
life and residual value of the truck did not change as a result of
the addition of the tool carrier.
Required:
1. Record the installation of the tool carrier assuming it is a
component of the truck
2. Calculate depreciation on the truck and its new component, the
tool carrier for the company’s December 31, 2020 year ends
3. Calculate the book value of the truck at December 31, 2020 and
2021
In: Accounting
Recording Asset Retirement Obligation
BPP Company maintains underground storage tanks for its operations. A new storage tank was installed and made ready for use at a cost of $400,000 on January 1, 2020. The useful life is estimated at 15 years, at which time the company is legally required to remove the tank and restore the area at an estimated cost of $40,000. The appropriate discount rate for the company is 12%.
Answer the following questions, rounding your answers to the nearest whole number.
a. Record the storage tank asset and the related asset retirement obligation on January 1, 2020.
b. Record any required adjusting entries on December 31 2020.
c. Assume that on December 31, 2035, the tank is safely removed at a cost of $46,000. Record the required journal entry.
In: Accounting
Units-of-Production Depreciation Irons Delivery Inc. purchased a new delivery truck for $42,000 on January 1, 2019. The truck is expected to have a $2,000 residual value at the end of its 5-year useful life. Irons uses the units-of-production method of depreciation. Irons expects the truck to run for 150,000 miles. The actual miles driven in 2019 and 2020 were 40,000 and 36,000, respectively. Required: Prepare the journal entry to record depreciation expense for 2019 and 2020. Round your answers to the nearest dollar. Do not round intermediate calculations. 2019 Dec. 31 Depreciation Expense Accumulated Depreciation (Record units-of-production depreciation expense) 2020 Dec. 31 Depreciation Expense Accumulated Depreciation (Record units-of-production depreciation expense)
In: Accounting
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In: Accounting
On January 1, 2019, FLOWERS Inc. rendered services in exchange for a four-year promissory note having a face value of $10,000. Interest at a rate of 3% is payable annually on January 1 (first payment
Jan 1, 2020). The customer has credit ratings that require it to borrow money at 8% interest.
FLOWERS uses IFRS.
Required: Show and label all calculations. (Round to the nearest dollar.)
What is the value of note / interest receivable recorded by FLOWERS at its year end of December 31, 2020
In: Accounting
| On January 5, 2018 Calvin's Cropcrushers, Inc. purchased crop | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| crushing equipment for which the following information is available: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Original cost.................. | $3,800,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Estimated residual value....... | $200,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Useful life in years........... | 10 | years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Useful life expressed in operating hours | 20,000 | hours | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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In: Accounting
P18.8 (LO 2, 3) (Time Value, Gift Cards, Discounts) Presented below are two independent revenue arrangements for Colbert Company.
Instructions
Respond to the requirements related to each revenue
arrangement.
Colbert sells 20 nonrefundable $100 gift cards for 3D printer paper on March 1, 2020. The paper has a standalone selling price of $100 (cost $80). The gift cards expiration date is June 30, 2020. Colbert estimates that customers will not redeem 10% of these gift cards. The pattern of redemption is as follows.
Redemption Total
March 31
50%
April 30
80%
June 30
85%
Prepare the 2020 journal entries related to the gift cards at March
1, March 31, April 30, and June 30.
In: Accounting