On January 1, 2017, 3Way Energy issued $200 million of 15-year, floating-rate debentures at par value. The
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On January 1, 2017, 3Way Energy issued $200 million of 15-year, floating-rate debentures at par value. The debentures pay interest on June 30 and December 31 of each year. The floating interest rate is set equal to "LIBOR plus 6%" on January 1 of each year. The LIBOR was 6% when the bonds were issued and 8% on January 1, 2018.
Required:
1. How much cash interest did 3Way Energy pay on the debentures in 2017? How much will it pay in 2018?
2. How much interest expense did the company record on the debentures in 2017? How much will it record in 2018?
DebenturesDebenture DefinitionDebentures are corporate loan instruments secured against the promise by the issuer to pay interest and principal. The holder of the debenture is promised to be paid a periodic interest and principal at the term. Companies who...
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Requirement 1 The floating interest rate for 2017 set on January 1 of that ...View the full answer
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Related Book For 
Financial Reporting and Analysis
ISBN: 978-1259722653
7th edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer
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