The rate of interest that actually is incurred on a bond payable is called the: Ordinarily, the proceeds from the sale of a bond issue will be equal to the: Seaside issues a bond that has a stated interest rate of 12%, face amount of $50,000, and is due in 5 years. Interest … Read more
Brief Exercise 14-2 (Algo) Determining the price of bonds [LO14-2] A company issued 5%, 20-year bonds with a face amount of $60 million. The market yield for bonds of similar risk and maturity is 6%. Interest is paid semiannually. At what price did the bonds sell? Note: Do not round intermediate calculations and round you … Read more
Week 6: Bonds and Notes Payable Let’s discuss the differences between bonds and notes payable. How do we account for bonds when they are issued at par, at a premium, and at a discount? What are the required disclosures for notes and bonds payable?
Which of the following is not a characteristic of a liability? Jane’s Donut Company borrowed $191,000 on January 1, 2024, and signed a two-year note bearing interest at 14%. Interest is payable in full at maturity on January 1, 2026. In connection with this note, Jane’s should report interest expense at December 31, 2024, in the … Read more
Exercise 13-1 (Algo) Bank loan; accrued interest [LO13-2] On November 1, 2024, Quantum Technology, a geothermal energy supplier, borrowed $6 million cash to fund a geological survey. The loan was made by Nevada BancCorp under a noncommitted short-term line of credit arrangement. Quantum issued a nine-month, 12% promissory note. Interest was payable at maturity. Quantum’s … Read more
Week 5: Contingent Liabilities Define contingent liability. What is the criteria to determine whether or not to report the contingency on financial statements? What supporting documentation is required? Please provide a detailed example of a contingent liability
In which investment category are fair values and subsequent growth of an investee not relevant for reporting? Top of Form Bottom of Form In 2022, Osgood Corporation purchased $7.1 million worth of 10-year municipal bonds at face value. On December 31, 2024, the bonds had a fair value of $3,700,000 and Osgood reclassified the bonds … Read more
Exercise 12-1 (Algo) Securities held-to-maturity; bond investment; effective interest, discount; financial statement effects [LO12-1, 12-2] Tanner-UNF Corporation acquired as a long-term investment $180 million of 7.0% bonds, dated July 1, on July 1, 2024. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 9% … Read more
Week 4: Investment Securities Based on what you have read in your ebook and lesson, including the Becker material, identify the categories of debt and equity securities, and describe the accounting and reporting treatment for each category. How do debt and equity securities differ? Describe how the various levels of ownership impact how companies account … Read more
Depreciation, depletion, and amortization: Cutter Enterprises purchased equipment for $81,000 on January 1, 2024. The equipment is expected to have a five-year life and a residual value of $7,800. Using the double-declining-balance method, depreciation for 2025 would be: is expected to have a five-year life and a residual value of $6,000. Using the sum-of-the-years’-digits … Read more