Question
ACC 206: On 1 January 20X1, EFG Pte Ltd issues long-term bonds which are due on 31 December 20X5. Interest is paid semi-annually on June
ACC 206:
On 1 January 20X1, EFG Pte Ltd issues long-term bonds which are due on 31 December 20X5. Interest is paid semi-annually on June 30 and December 31 each year. The first interest payment is on 30 June 20X1. The face value of bonds is $400,000 with stated annual interest rate of 10%. At the time of issuance, the market interest rate is 12% per annum.
Required:
(a) Determine the price of the bonds issued by EFG Pte Ltd.
(7 marks)
(b) Illustrate the accounting by EFG Pte Ltd for the issuance of the bonds by preparing the necessary journal entries, journal narrative not required, for the year 20X1. (9 marks)
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
