Business, 16.02.2021 23:20 walkinginmypurpose

Federal Semiconductors issued 12% bonds, dated January 1, with a face amount of $100 million on January 1, 2018. The 20-year bonds sold for $105.477 million and mature in 2035. For bonds of similar risk and maturity the market yield was 11%. Interest is paid annually on December 31. Federal uses the effective interest method, and elected to report these bonds at their fair value. On December 31, 2018, the fair value of the bonds was $103.050 million (OTC market) because of an increase in the company’s financial risk. a. Prepare the journal entry for the interest payment on December 31, 2018.

b. Calculate the PV of the remaining payments (CV of B/P) as of December 31, 2016 and prepare the journal entry to adjust the bonds to their fair value for presentation on the December 31, 2018 balance sheet.
FVadjustment acct
CV of B/P, 1/1/2018 $105,477,000 - $105,477,000 (MV) = (beginning bal)
2018 amortization
CV of B/P, 12/31/2018 - $103,050,000 (MV) = (desired end bal)
increase/decrease

12/31/2018 JE:

c. Assume that Federal has already recorded its 2019 interest payment and the fair value of the bonds on December 31, 2019 had increased to $107.200 million mainly because of a decrease in general interest rates. Calculate the PV of the remaining payments (CV of B/P) as of December 31, 2019 and prepare the journal entry to adjust the bonds to their fair value for presentation on the December 31, 2019 balance sheet.
FVadjustment acct
CV of B/P, 12/31/2018 - $103,050,000 (MV) = (beginning bal)
2019 ___ amortization
CV of B/P, 12/31/2019 - $107,200,000 (MV) = (desired end bal)
increase/decrease

12/31/2019 JE:

Answers: 3

Show answers

Another question on Business

Business, 21.06.2019 15:30

Jen heard that the bank where she kept her money was going to close for good. jen said she wasn't worried

Answers: 3

Answer

Business, 21.06.2019 20:20

After all revenue and expense accounts have been closed at the end of the fiscal year, income summary has a debit of $2,450,000 and a credit of $3,000,000. at the same date, retained earnings has a credit balance of $8,222,600, and dividends has a balance of $125,000. required: a. journalize the entries required to complete the closing of the accounts on december 31. refer to the chart of accounts for exact wording of account titles. b. determine the amount of retained earnings at the end of the period.

Answers: 1

Answer

Business, 22.06.2019 19:40

Chang corp. has $375,000 of assets, and it uses only common equity capital (zero debt). its sales for the last year were $595,000, and its net income was $25,000. stockholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 15.0%. what profit margin would the firm need in order to achieve the 15% roe, holding everything else constant? a. 9.45%b. 9.93%c. 10.42%d. 10.94%e. 11.49%

Answers: 2

Answer

Business, 22.06.2019 21:10

Ahospital purchases a $500,000 magnetic resonance imaging (mri) machine that has a useful life of 9 years. the salvage value at the end of 9 years is $77,000. (a) write a linear equation that describes the value y (in dollars) of the mri machine in terms of the time t (in years), 0 ≤ t ≤ 9. (b) find the value, in dollars, of the machine after 6 years. $ (c) find the time, in years, when the value of the equipment will be $140,000. (round your answer to two decimal places.) yr

Answers: 2

Answer

You know the right answer?

Federal Semiconductors issued 12% bonds, dated January 1, with a face amount of $100 million on Janu...

Questions