The following events pertained to First Capital Company. Required 1. Calculate the fair value of the bond
Question:
The following events pertained to First Capital Company.
Required
1. Calculate the fair value of the bond at the following dates:
(a) 31 December 20x0
(b) 31 December 20x1
(c) 31 December 20x2 2. Prepare journal entries to record the investment in the fixed rate bond from 31 December 20x0 to 31 December 20x2.
Transcribed Image Text:
31 December 20x0 31 December 20x1 31 December 20x2 Purchased a fixed rate bond with a coupon interest rate of 8.5% per annum and a nominal value of $1,000,000. The bond matured on 31 December 20x5. Market interest rate for a similar bond on 31 December 20x0 was 8% per annum. The business model is to collect contractual cash flows and for sale. Market interest rate for the bond fell to 6%. First Capital Company made a fair value adjustment of the bond. Market interest rate for the bond fell to 5%. First Capital Company sold 40% of the bond. First Capital Company changed the business model for the remaining bonds held to collect contractual cash flows only. Assume interest is received annually on 31 December.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 50% (2 reviews)
Answered By
Somshukla Chakraborty
I have a teaching experience of more than 4 years by now in diverse subjects like History,Geography,Political Science,Sociology,Business Enterprise,Economics,Environmental Management etc.I teach students from classes 9-12 and undergraduate students.I boards I handle are IB,IGCSE, state boards,ICSE, CBSE.I am passionate about teaching.Full satisfaction of the students is my main goal.
I have completed my graduation and master's in history from Jadavpur University Kolkata,India in 2012 and I have completed my B.Ed from the same University in 2013. I have taught in a reputed school of Kolkata (subjects-History,Geography,Civics,Political Science) from 2014-2016.I worked as a guest lecturer of history in a college of Kolkata for 2 years teaching students of 1st ,2nd and 3rd year. I taught Ancient and Modern Indian history there.I have taught in another school in Mohali,Punjab teaching students from classes 9-12.Presently I am working as an online tutor with concept tutors,Bangalore,India(Carve Niche Pvt.Ltd.) for the last 1year and also have been appointed as an online history tutor by Course Hero(California,U.S) and Vidyalai.com(Chennai,India).
4.00+
2+ Reviews
10+ Question Solved
Related Book For
Advanced Financial Accounting An IFRS Standards Approach
ISBN: 9781285428765
4th Edition
Authors: Pearl Tan, Chu Yeong Lim, Ee Wen Kuah
Question Posted:
Students also viewed these Business questions
-
Find the work done by the force field F on a particle moving along the given path. F(x, y) = yi xj C: counterclockwise along the semicircle y (2, 0) to (-2, 0) = 4x from
-
5. Germany is known for its Autobahn highways which (for the most part) have no speed limits. While adored by fast car enthusiasts, the absence of speed limits may influence gasoline consumption...
-
The following transactions relate to Waterway Investments for 2011 and 2012. Waterway closes its books on December 31 each year. 2011 July 20 Waterway purchased 5,000 common shares of Meta-Solid...
-
Consider the integral where n is an integer. Using the trigonometric identity 1 + tan 2 x = sec 2 x, show that and hence obtain the recurrence relation Use this to find (Recurrence relations of this...
-
1. A baseball player in center field is approximately 330 feet from a television camera that is behind home plate. A batter hits a fly ball that goes to the wall 420 feet from the camera (see...
-
(a) Find the eccentricity (b) Identify the conic (c) Give an equation of the directrix (d) Sketch the conic. r= 2 3 + 3 sine
-
Assume the same facts as in the preceding problem. However, also assume that the variable costs per room per day are $10. 1. Suppose the best estimate is a 53 percent general occupancy rate at an...
-
Flaherty Accounting Services pays $2,000 per month for a tax software license. In addition, variable charges incurred average $9 for every tax return the firm prepares. a. Determine the total cost...
-
Exercise 20-05 Shamrock Company has five employees participating in its defined benefit pension plan. Expected years of future service for these employees at the beginning of 2020 are as follows....
-
Using the information in P8.8 , assume that Evergreens functional currency is the dollar. Prepare the financial statements of Evergreen for the year ended 31 October 20x3 in dollars. Show the...
-
Can each of the following items be designated as amortized cost investments? (a) AA Company acquires a bond issued by BB Corporation. The terms of the bond provide the holder with an option to...
-
At January 1, 2022, Youngstown Company reported the following property, plant, and equipment accounts: The company uses straight-line depreciation for buildings and equipment, its year-end is...
-
You have been approached to give some new graduate trainees a talk. Prepare and shed light on the following human resource management concepts; a) Outsourcing b) Hard and Soft Human Resource c)...
-
Banner House Inc. gives all its sales people a base salary of $47,500 per annum and a commission of 10% on all banners that they sell over $6,000. Calculate Samantha's salary last month if she sold...
-
Werling Corporation has current Earnings & Profits ( EP ) of $ 2 5 , 0 0 0 and accumulated EP of $ 1 0 , 0 0 0 . Werling Corporation makes the following distributions to its shareholders during the...
-
What does the following function do! What is the complexity? } public static void output (Node head) Node H = head; // head of the resulting linked list Node res = null; // temporary head of the...
-
I have entered the input multiple times but I keep getting an error. Can you review and see what I am doing wrong? For this assignment, you are given two complex numbers. You will print the result of...
-
The stockholders equity section for Apple Inc. is shown in Appendix A. Instructions for accessing and using the companys complete annual report, including the notes to the financial statements, are...
-
Before the latest financial crisis and recession, when was the largest recession of the past 50 years, and what was the cumulative loss in output over the course of the slowdown?
-
Karlow Corporation owns 60 percent of Draw Companys voting shares. During 20X3, Karlow produced 25,000 computer desks at a cost of $82 each and sold 10,000 of them to Draw for $94 each. Draw sold...
-
Karlow Corporation owns 60 percent of Draw Companys voting shares. During 20X3, Karlow produced 25,000 computer desks at a cost of $82 each and sold 10,000 of them to Draw for $94 each. Draw sold...
-
Karlow Corporation owns 60 percent of Draw Companys voting shares. During 20X3, Karlow produced 25,000 computer desks at a cost of $82 each and sold 10,000 of them to Draw for $94 each. Draw sold...
-
Chelsea is a single mother living in California with her four-year-old daughter, Kelsey. In 2022, Chelsea earned $28,000 from her job. She also received a small inheritance from her late grandmother...
-
hca 312 morton's hospital comptroller, is looking to pay short and long term debt. this is called
-
The table below itemizes several assets. The company uses the double-declining-balance method to determine depreciation expense, which means that the rate used will be 2 divided by useful life.For...
Study smarter with the SolutionInn App