Caterpillar Inc. Taps the Chinese Bond Market

1. What are they using bonds in China for?
2. What is a dim sum bond?
3. What funding alternatives, other than such bonds, could Caterpillar have pursued?
4. Assume that on July 1, 2019, the company issued a 1 billion 3-year bond with annual coupon rate of 8%, an annual effective rate of 5.0%, and interest to be paid semiannually. Was this bond issued a face value, at a premium over face value, or at a discount from face value? Explain briefly, and without any computations.
5. What entry will the company make to record that issuance of bonds?
6. What entry will the company make to record the semiannual interest payment on December 31, 2019? On June 30, 2020?
7. What amount will be presented on the company's balance sheet as of December 31, 2020, for the bond?
8. Over the life of the bond, (a) what is the total amount of interest expense that will be reported in the company's income statements? And (b) what is the total amount of cash paid for interest?
9. Assume that on December 31, 2020, the market value of Caterpillar's dim sum bond issuance is 999 million. How would that affect the carrying amount on the balance sheet at this date?