1) | |
The present value of expected payments = $325/(1.04)^2 | $ 300.48 |
Impairment loss = $396 – $300.48 = | $ 95.52 |
Monster's Impairment Loss for 2013 | $ 95.52 |
2) | |
Impairment reversals are not reported, per U.S. GAAP | |
3) | |
If the interest and principal payments continue, Monster’s yield assume to be rate X | |
Interest = $396 x 4% | 15.84 |
$300.48 = $15.84/(1+X%) + [($15.84 +396)]/(1+X%)^2 | |
Yield X = | 20.00% |
Chapter 1 Intercorporate Investments: An Overview Held-to-maturity securities are recorded at amortized cost which approximates fair...
E 12-18 Fair value option; held-to-maturity investments • LO1 LO2 LO7 This is a variation of Exercise 12-1 focusing on the fair value option.) Tanner-UNF Company acquired as a long-term investment $240 million of 6% bonds, dated July 1. on July 1, 2012. Company management has the positive intent and ability to hold the bonds until maturity, but when the bonds were acquired Tanner-UNF decided to elect the fair value option for accounting for its investment. The market interest rate...
Exercise 12-25 (Algo) Fair value option; held-to-maturity investments [LO12-1, 12-2, 12-3, 12-8] Tanner-UNF Corporation acquired as a long-term investment $190 million of 8% bonds, dated July 1, on July 1, 2021. Company management has the positive intent and ability to hold the bonds until maturity, but when the bonds were acquired Tanner-UNF decided to elect the fair value option for accounting for its investment. The market interest rate (yield) was 10% for bonds of similar risk and maturity. Tanner-UNF paid...
Trading securities (at cost) Short-term stock investments (at cost) Equity method investments Held-to-naturity securities (long-tern) $ 5,200 23.500 70.500 13.500 Cash Fair value adjustment-stock Accounts receivable Fair value adjustment-trading $ 10.500 (-1.100) 2.500 600 Prepare the assets section of a classified balance sheet. Hint Fair Value Adjustment-Trading increases trading securities; Fair Value Adjustment-Stock decreases Stock investments (Amounts deducted should be indicated by a minus sign.) GERMX CO. Assets Section of Balance Sheet December 31 Assets Current assets Cash Stock investments...
E 12-2 Securities held-to-maturity; bond investment; effective interest, premium LO12-1 Mills Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2018. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 4% for bonds of similar risk and maturity. Mills paid $280 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of...
35 Held-to-Maturity securities are reported at their fair market value on the balance sheet date b. include both stocks and bonds c. are primarily purchased to earn interest revenue d. all of the above a.
Held to Maturity Securities: ABC Co. Bonds Trading Securities: Amortized cost 12/31/2017 $367,500 Amortized Cost 12/31/2018 $360,000 awarded pred Fair Value 12/31/2017 $375,000 Fair value 12/31/2017 $ 48,000 $ 47,000 $ 44,000 Fair Value 12/31/2017 $130,500 DEF Co. Bonds GEH Inc. Bonds IJK Inc. Bonds Available for sale Securities: LMN Co. Bonds Fair Value 12/31/2018 $400,000 Fair Value 12/31/2018 $ 59,500 $ 77,000 $ 38,500 Fair Value 12/31/2018 $150,400 Cost $ 66,000 $ 39,000 $ 32,990 Cost $140,000 2140,000 What...
Income statement: maturity: bond investment; effective interest, discount E12-1 Securities held-to-matur Tanner-UNF Corporation acqui 1, on July 1, 2021. Company me maturity. The market interest rat paid $200 million for the bond December 31. As a re "" acquired as a long-term investment $240 million of 6% bonds, dated July mpany management has the positive intent and ability to hold the bonds until rest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNE bonds. The company will...
Question 10 (1 point) Which category of securities is presented on the balance sheet at amortized cost? Securities available for sale. Equity investments of less than 20 percent ownership Held-to-maturity securities. Trading securities Question 11 (1 point) Goofy Inc. bought a sizeable amount of Crazy Co.'s bonds for $150,000 on May 5. 2017, and classified the investment as available for sale. The market value of the bonds declined to $118.000 by December 31, 2017. Goofy reclassified this investment as trading...
Problem 12-9 (Algo) Securities held-to-maturity; trading securities and equity investments [LO12-1, 12-2, 12-3, 12-5] Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities. The following selected transactions relate to Amalgamated's investment activities during the last quarter of 2021 and the first month of 2022. The only securities held by Amalgamated at October 1, 2021 were $45 million of 10% bonds of Kansas Abstractors,...
Problem 12-1 Securities held-to-maturity; bond investment; effective interest [LO12-1, 12-2) Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $240 million of 6% bonds, dated January 1, on January 1, 2018. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $219 million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions,...