Explain how investments in bonds held-to-maturity should be accounted for.
Explain how investments in bonds held-to-maturity should be accounted for.
Homework Answers
Accounting for initial purchase: They are recorded at their cost with cost including any brokerage and other payments to acquire the bonds.
Accounting for in the balance sheet: Held to bond maturities are shown as non current assets unless the maturity is less than one year they are reported as current assets. Held to bond maturity are reported on the balance sheet at the amortized cost. If the bonds have been purchased at a premium or discount, then the same is amortized over the life of the bonds.
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Explain how investments in bonds held-to-maturity should be accounted for.
Which of the following statement(s) is (are) true about reporting held to maturity securities? I. Investments...
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E 12-18 Fair value option; held-to-maturity investments • LO1 LO2 LO7 This is a variation of...
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...
Bonita Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have...
Bonita Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $730,000, an amortized cost of $730,000, and a fair value of $653,000. The company believes that impairment accounting is now appropriate for these bonds. Prepare the journal entry to recognize the impairment. What is the new cost basis of the municipal bonds? Given that the maturity value of the bonds is $730,000, should Bonita Corporation amortize the difference between the...
Aviation Inc. purchased securities on 1/1/2019 that would initially be accounted for in the financial statements...
Aviation Inc. purchased securities on 1/1/2019 that would initially be accounted for in the financial statements as an investment held-to-maturity. Held to Maturity Securities: Cost 1/1/2019 Fair Market Value 12/31/2019 Bronx Co. Bonds $ 300,000 $ 278,000 At 12/31/2019, Aviation Inc. decided that they would sale the bond within 90 days. Assume that Aviation now has to adjust their financial statements and account for the investment as available for sale. Write a memo detailing the impact that the change will...
Interest revenue earned on held-to-maturity debt investments is reported on the income statement in the ________...
Interest revenue earned on held-to-maturity debt investments is reported on the income statement in the ________ section. A. operating income B. current assets C. noncontrolling interest D. other income and expenses
True or False: If held to maturity, bonds issued at a discount yield the best return...
True or False: If held to maturity, bonds issued at a discount yield the best return on investment compared to premium bonds.
Explain the effects that inflation can have on a health care organization and how it should be accounted for in terms of...
Explain the effects that inflation can have on a health care organization and how it should be accounted for in terms of financial and strategic planning.
Company A estimated that it will receive less interest payments and principal payments from its Held-to-Maturity...
Company A estimated that it will receive less interest payments and principal payments from its Held-to-Maturity investments in Company B’s bonds. See the information below: Amortized cost of Company B bonds: $800,000. Discounted value of estimated payments at the interest rate on the date of bond inception: $550,000. Fair value of Company B bonds: $400,000. How will Company A record this assessment?
The following Tarjee Corporation transactions are for bonds that were purchased as a held for trading...
The following Tarjee Corporation transactions are for bonds that were purchased as a held for trading investment for the year ended December 31, 2018: Feb. 1 Purchased $250,000 of Leslye Corporation 3% bonds at 105 (this means 105% of maturity value). Interest is received semi-annually on August 1 and February 1. The bonds mature on February 1, 2020. Aug. 1 Received interest on Leslye bonds. 2 Sold $100,000 of the Leslye bonds at 102. Dec. 31 Accrued interest on the...
Larkspur Corporation purchased, as a held-to-maturity investment, $55,000 of the 8%, 4-year bonds of Harrison, Inc....
Larkspur Corporation purchased, as a held-to-maturity investment, $55,000 of the 8%, 4-year bonds of Harrison, Inc. for $58,861, which provides a 6% return bonds pay interest semiannually. Prepare Larkspur's journal entries for (a) the purchase of the investment, and (b) the receipt of semiannual interest and premium amortization. Assume effects interest amortization is used. (Round answers to decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is ent Do not indent manually. If no entry is required,...
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...
The following Tarjee Corporation transactions are for bonds that were purchased as a held for trading investment for the year ended December 31, 2018: Feb. 1 Purchased $250,000 of Leslye Corporation 3% bonds at 105 (this means 105% of maturity value). Interest is received semi-annually on August 1 and February 1. The bonds mature on February 1, 2020. Aug. 1 Received interest on Leslye bonds. 2 Sold $100,000 of the Leslye bonds at 102. Dec. 31 Accrued interest on the...
Larkspur Corporation purchased, as a held-to-maturity investment, $55,000 of the 8%, 4-year bonds of Harrison, Inc. for $58,861, which provides a 6% return bonds pay interest semiannually. Prepare Larkspur's journal entries for (a) the purchase of the investment, and (b) the receipt of semiannual interest and premium amortization. Assume effects interest amortization is used. (Round answers to decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is ent Do not indent manually. If no entry is required,...
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