Question
On 1/1/Year 1, Flint Co. (a U.S. GAAP) issues an annual-pay, 10-year, $750,000, 4.25% coupon bond when market rates are 5.00%. The bond's issuance price
On 1/1/Year 1, Flint Co. (a U.S. GAAP) issues an annual-pay, 10-year,
$750,000, 4.25% coupon bond when market rates are 5.00%. The bond's issuance price is $706,565. One year later, Flint redeems the bond at 94.
1. Calculate the unamortized discount at the time the bond is redeemed.
2. Determine whether there is a gain or loss and calculate the amount.
3. Provide the journal entry for the bond extinguishment.
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
a The bonds carrying value at the time of redemption can be calculated as follows Carrying value Iss...
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Step: 3
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Fundamentals of Financial Accounting
Authors: Fred Phillips, Robert Libby, Patricia Libby
5th edition
78025915, 978-1259115400, 1259115402, 978-0078025914
