CASE 4 LowTolerance Ltd. is a Canadian public corporation that manufactures high-precision tools Non-current used by companies in the semiconductor industry. Recently, demand for LowTolerance's liabilities company did not have the cash needed for the expansion to to raise capital, management liabilities company did not have the cash meeded for the expansion, to raise capital, management (30 minutes) at 92.46. The bonds have a stated interest rate of 9%, and pay interest semi-annually on January 31 and July 31 . The company incurred direct costs related to the issue of the bond (e.g., legal and accounting fees and the investment banker's commission) of $280,010. P. Mini-Cases On August 1, 2025, LowTolerance retired 30% of the bonds. At that time the bonds' market price was $99. Required: (Round the numbers in your answers to the nearest dollar.) a. What were the gross proceeds from the bond issue? What interest rate did the investors require on the bonds? What were the net proceeds from the bond issue? b. Another bond of LowTolerance Ltd. is traded based on a market rate of 10%. Is the rate on both bonds the same? If not, what might cause the difference? c. IFRS mandates the use of the effective interest method for determining interest expense. In your opinion, what might be the problem(s) with the use of the straight-line method? d. Prepare the journal entry for the issuance of the bonds on August 1, 2021. e. Prepare the original bond amortization schedule - do not include the partial redemption on August 1, 2025. f. Calculate the gain or loss on the partial bond retirement on August 1, 2025, and prepare the journal entry to record this event. CASE 4 LowTolerance Ltd. is a Canadian public corporation that manufactures high-precision tools Non-current used by companies in the semiconductor industry. Recently, demand for LowTolerance's liabilities company did not have the cash needed for the expansion to to raise capital, management liabilities company did not have the cash meeded for the expansion, to raise capital, management (30 minutes) at 92.46. The bonds have a stated interest rate of 9%, and pay interest semi-annually on January 31 and July 31 . The company incurred direct costs related to the issue of the bond (e.g., legal and accounting fees and the investment banker's commission) of $280,010. P. Mini-Cases On August 1, 2025, LowTolerance retired 30% of the bonds. At that time the bonds' market price was $99. Required: (Round the numbers in your answers to the nearest dollar.) a. What were the gross proceeds from the bond issue? What interest rate did the investors require on the bonds? What were the net proceeds from the bond issue? b. Another bond of LowTolerance Ltd. is traded based on a market rate of 10%. Is the rate on both bonds the same? If not, what might cause the difference? c. IFRS mandates the use of the effective interest method for determining interest expense. In your opinion, what might be the problem(s) with the use of the straight-line method? d. Prepare the journal entry for the issuance of the bonds on August 1, 2021. e. Prepare the original bond amortization schedule - do not include the partial redemption on August 1, 2025. f. Calculate the gain or loss on the partial bond retirement on August 1, 2025, and prepare the journal entry to record this event
