Business, 14.04.2020 16:35 heaven8606

Indigo Company invests $11,700,000 in 4% fixed rate corporate bonds on January 1, 2020. All the bonds are classified as available-for-sale and are purchased at par. At year-end, market interest rates have declined, and the fair value of the bonds is now $12,387,000. Interest is paid on January 1. Prepare journal entries for Indigo Company to (a) record the transactions related to these bonds in 2020, assuming Indigo does not elect the fair option; and (b) record the transactions related to these bonds in 2020, assuming that Indigo Company elects the fair value option to account for these bonds.

Answers: 1

Show answers

Answers

Answer from: betzaidasalgado0103

a. Indigo do not elect fair value option

Journal entries

Date Description DR CR

2020

Jan 1 Bonds-available for sale asset $11,700,000

Cash book 11,700,000

Being the amount paid on acquisition

Dec 31

Interest receivable (4%*11,700,000) 468,000

Income statement 468,000

Being the interest due on the bond at the year end

b. Indigo elect the fair value option

Date Description DR CR

2020

Jan 1 Bond-available for sale asset 11,700,000

cash book 11,700,000

Being the amount paid on acquisition

Dec 31 Interest receivable 468,000

Income statement 468,000

Being the interest due on the bond at the year end

Dec 31 Bond 687,000

Revaluation surplus 687,000

Being the excess of fair value over the book value

Explanation:

Answer from: Quest

30,000 would be the answer

Answer from: Quest

Answerthe legislative process experiences longer delays than monetary policy;

Another question on Business

Business, 21.06.2019 23:20

On october 2, 2016 starbucks corporation reported, on its form 10-k, the following (in millions): total assets $14,329.5 total stockholders' equity 5,890.7 total current liabilities 4,546.9 what did starbucks report as total liabilities on october 2, 2016? select one: a. $12,516.7 million b. $6,377.3 million c. $995.0 million d. $8,438.8 million e. none of the above

Answers: 2

Answer

Business, 22.06.2019 14:10

When a shortage or a surplus arises in the loanable funds market a. the supply of loanable funds changes to return the economy to its original real interest rate b. the nominal interest rate is pulled to the new equilibrium level c. the demand for loanable funds changes to return the economy to its original real interest rate d. the real interest rate is pulled to the new equilibrium level

Answers: 3

Answer

Business, 22.06.2019 16:40

An electronics store is running a promotion where for every video game purchased, the customer receives a coupon upon checkout to purchase a second game at a 50% discount. the coupons expire in one year. the store normally recognized a gross profit margin of 40% of the selling price on video games. how would the store account for a purchase using the discount coupon?

Answers: 3

Answer

Business, 22.06.2019 18:10

Ashop owner uses a reorder point approach to restocking a certain raw material. lead time is six days. usage of the material during lead time is normally distributed with a mean of 42 pounds and a standard deviation of four pounds. when should the raw material be reordered if the acceptable risk of a stockout is 3 percent?

Answers: 1

Answer

You know the right answer?

Indigo Company invests $11,700,000 in 4% fixed rate corporate bonds on January 1, 2020. All the bond...

Questions