FIN Company invests in a number of privately issued bonds. On January 3, 2020, FIN Company...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
FIN Company invests in a number of privately issued bonds. On January 3, 2020, FIN Company invested in a 7% bond issued by S Company at par for $600,000 which would mature on December it 31, 2024. In the worst case scenario of a default event, S Company is not expected to be able to pay interest in 2023 and 2024 and the principal payment due on December 31, 2024. However, existing cash reserves are sufficient to pay interest due in 2020 , 2021, and 2022. On January 3, 2020, the credit quality of S Company was good and the probability of default during the first 12 months to December 31, 2020, was 0.5%. The probability remained stable throughout the period. Ignore discounting. What stage of impairment loss would best describe the state of S Company bonds during 2020? What is the loss allowance at December 31, 2020? FIN Company invests in a number of privately issued bonds. On January 3, 2020, FIN Company invested in a 7% bond issued by S Company at par for $600,000 which would mature on December it 31, 2024. In the worst case scenario of a default event, S Company is not expected to be able to pay interest in 2023 and 2024 and the principal payment due on December 31, 2024. However, existing cash reserves are sufficient to pay interest due in 2020 , 2021, and 2022. On January 3, 2020, the credit quality of S Company was good and the probability of default during the first 12 months to December 31, 2020, was 0.5%. The probability remained stable throughout the period. Ignore discounting. What stage of impairment loss would best describe the state of S Company bonds during 2020? What is the loss allowance at December 31, 2020?
Expert Answer:
Answer rating: 100% (QA)
1 IFRS9 has three impairment stages based on expected credit loss ECL Stag... View the full answer
Related Book For
Operating Systems Internals and Design Principles
ISBN: 978-0133805918
8th edition
Authors: William Stallings
Posted Date:
Students also viewed these finance questions
-
In a number of early computers, an interrupt caused the register values to be stored in fixed locations associated with the given interrupt signal. Under what circumstances is this practical...
-
Quetzal Energy Inc. issued bonds on January 1, 2014, that pay interest semi-annually on June 30 and December 31. The par value of the bonds is $240,000, the annual contract rate is 8%, and the bonds...
-
Queen Energy Inc. issued bonds on January 1, 2020, that pay interest semiannually on June 30 and December 31. The par value of the bonds is $270,000, the annual contract rate is 10%, and the bonds...
-
In a recent self-check, the store manager had her employees compare prices on 320 different items which were picked at random for cross-check. The employees recorded the shelf price and the price...
-
The graph in Figure 3.22 shows home prices in different regions of the United States. Note that the data have not been adjusted for the effects of inflation. a. In words, describe the general trends...
-
Use the formula in Exercise 12.4.45 to find the distance from the point to the given line. (4, 1, -2); x = 1 + t, y = 3 - 2t, z = 4 - 3t
-
Explain how an accounting gain or loss to the debtor may occur when a call privilege is exercised.
-
Tasha Orin is unable to reconcile the bank balance at January 31. Tashas reconciliation is shown here. Cash balance per bank ....... $3,677.20 Add: NSF check ......... 450.00 Less: Bank service...
-
Gemmex Inc. is a consulting company that specializes in systems design and implementation. The following transactions are recorded by Gemmex during July, its first month of operations. July 1 :...
-
Based on the attached case details address the following in at least 1. External environment (threats and opportunities) 2. Internal capabilities 3. Recommended business-level strategy to follow Case...
-
What is Process Technology? What can you do with a process technology degree? How to get a job in process technology?
-
A skier/snowboarder starts at rest at the top of a snowy (friction-free) hill with height h. After the bottom of this hill there is a small "jump" hill. The top of the jump has height h and a...
-
2) Simplify the following expressions using algebraic rules: a) ab'cbd + bcd'+ ab'c' +abc'd (3 terms, 6 literals) b) xyz' x'yz' + x'yz + xyz (1 terms, 1 literal) c) a'b'c' a'bc' + a'bc + ab'c + abc'...
-
Sal Strods opens a web consulting business called Landscape Dreams and completes the following transactions in its first month of operations. Prepare journal entries for each transaction and identify...
-
1.Each element of the nursing process involves critical thinking. Which definition of assessment reflects critical thinking? a.Correctly and completely documenting the assessment data on a form b.A...
-
Analyze the performance review system of any organization. List the current pros and cons of that system, along with recommendations for improvements. Explain how it will tie the performance review...
-
Please answer the critical thinking questions. 10.2 Auto Insurance for Javier Perez Javier Perez is a 40-year-old loan officer at a large regional bank; he has a 16-year-old son. He has decided to...
-
In Problems 1522, find the principal needed now to get each amount; that is, find the present value. To get $750 after 2 years at 2.5% compounded quarterly.
-
Consider the following definition of semaphores: void semWait(s) { if (s.count > 0) { s.count--; } else { place this process in s.queue; block; } } void semSignal (s) { if (there is at least one...
-
Explain the rationale behind the three-tier client/server architecture.
-
An I/O-bound program is one that, if run alone, would spend more time waiting for I/O than using the processor. A processor-bound program is the opposite. Suppose a short-term scheduling algorithm...
-
Take each figure in the 2001 columns and measure its percentage change over 2000. Identify where the most signifi- cant changes have occurred.
-
As with the balance sheet, compare the current-year reported figures in the profit and loss account with the information shown for the prior year. Calculate the percentage change from one year to the...
-
What two events led to the transformation and spread of accounting between the 12th and 15th centuries?
Study smarter with the SolutionInn App