When a company purchases a bond with face amount $1,000, it may pay more or less...
- When a company purchases a bond with face amount $1,000, it may pay more or less than $1,000. Explain why the price can be different from the face amount and what is a premium or discount.
By the time the bond matures, the company is paid back $1,000. Explain how the premium (or discount) is amortized.
- Identify and explain the three types of classifications for investments in debt securities. How unrealized holding gains and losses should be reported for each?
- If the cost of a financial investment (either in bonds or in stocks) is $5,000, and its fair value adjustment account has a debit balance of $200. At what amount do you report the investment on the balance sheet? What does this amount mean?
- What is the GAAP definition of fair value? What is the fair value option?
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When a company purchases a bond with face amount $1,000, it may
pay more or less...
Sandridge Inc. purchased 1,000 Transocean Corporation bonds in 2020 for $500 per bond and classified the...
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On January 1, 2018, Hoosier Company purchased $948,000 of 10% bonds at face value. The bond...
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Dim Corporation purchased 1,000 bonds of Witt Corporation in 2015 for $800 per bond and classified the investment as securities available for sale. The value of these holdings was $400 per bond on December 31, 2016, and $300 on December 31, 2017. During 2018, Dim sold all of its Witt bonds at $350 per share. If Dim records unrealized holding gains and losses up to the moment of sale, what would be the amount of reclassification adjustment that Dim would...
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10:08 AM Thu Feb 20 437% a Aas 1. Bee Company 5% bonds, purchased at face value, with an amortized cost of $4,000,000, and classified as held to maturity. At December 31, 2018, the Bee investment had a fair value of $3,500,000, and Stewart calculated that S240,000 of the fair value decline is a credit loss and $260,000 is a noncredit loss. At December 31, 2019, the Bee investment had a fair value of $3,700,000, and Stewart calculated that $140,000...
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