QUESTION>>>>>>
Sprinkle Corp. is a small public company with a December 31 scal year-end At the end of 2016. the company had $150 million of excess cash. The board of directors decided that the company should hold the funds until the right business opportunity appeared, rattler than pay out the funds to its shareholders and then have to issue shares to obtain the nancing later. The board directed management to invest the funds in a diversied portfolio of debt instruments. As a result, on January 1, 2017, management purchased $50 million of short-tam! government bonds. $50 million of medium-ten\" government bonds, and $50 million of high-quality corporate bonds. (The amounts are face values. not investment cost.) The following table provides additional intonnation about these investments, (Click the icon to view the investment data.) seams Requlmment a. Determine the investment cost of the three investments on January 1, 2017. (Use a nancial calculator to compute the amount required to purchase the bonds. Enter your nal answer as a positive number, and round to the nearest whole dollar.) Sprinkle Corp. is a small public company with a December 31 scal year~end. At the end of 2016, the company had $150 million of excess cash The board of directors decided that the company should hold the funds until the right business opportunity appeared, rather than pay out the funds to its shareholders and then have to issue shares to obtain the nancing later. The board directed management to invest the funds in a diversied portfolio of debt instruments As a result, on January 1, 2017. management purchased $50 million of short-term government bonds, $50 million of medium-tenn government bonds, and $50 million of high-quality corporate bonds (The amounts are face values, not investment cost) The following table provides additional information about these investments. (Click the icon to view the investment data.) R_equired Requirement b. Prepare amortization schedules for the medium-term government bonds and the corporate bonds (Round all amounts to the nearest whole dollar.) Begin by prepanng an amortization schedule for the mid-term government bonds. 2017 2018 2019 2021 Sprinkle Corp. is a small public company with a December 31 scal year-end. At the end of 2016, the company had $150 million of excess cash The board of directors decided that the company should hold the funds until the right business opportunity appeared, rather than pay out the funds to its shareholders and then have to issue shares to obtain the nancing later. The board directed management to invest the funds in a diversied portfolio of debt instruments As a result, on January 1, 2017. management purchased $50 million of short-term government bonds, $50 million of medium-term government bonds, and $50 million of high-quality corporate bonds. (The amounts are face values, not investment cost.) The following table provides additional information about these investments. (Click the icon to view the investment data.) R_equired Now prepare an amortization schedule for the corporate bonds. 201 7 2018 201 9 2021 Sprinkle Corp. is a small public company with a December 31 scal year-end. At the end of 2016, the company had $150 illion of excess cash. The board of directors decided that the company should hold the funds until the right business opportunity appeared, rather than pay out the funds to is shareholders and then have to issue shares to obtain the nancing later. The board directed management to invest the funds in a diversied portfolio of debt instruments. As a result, on January 1, 2017, management purchased $50 million of short-term government bonds, $50 million of medium-term govemment bonds, and $50 million of high-quality corporate bonds. (The amounts are face values, not investment cost.) The following table provides additional information about these investments. (Click the icon to view the investment data.) Muired Requirement c. For each of the three investments, determine the following amounts for each scal year (1) balance sheet asset; (2) income; (3) other comprehensive income (OCI); and (4) accumulated other comprehensive income component of equity. (1) Begin with the balance sheet asset amount for each of the three investments. (1) Balance Sheet Asset , 201 7 201 8 201 9 2020 2021 Sprinkle Corp. is a small public company with a December 31 scal year-end. At the end of 2016, the company had $150 million of excess cash. The board of directors decided that the company should hold the funds until the right business opportunity appeared, rattler than pay out the funds to its shareholders and then have to issue shares to obtain the nancing later. The board directed management to invest the funds in a diversied portfolio of debt instruments. As a result, on January 1, 2017, management purchased $50 million of short-ten" government bonds, $50 million of medium-term government bonds, and $50 million of high-quality corporate bonds (The amounts are face values, not investment cost.) The following table provides additional information about these investments. (Click the icon to view the investment data.) R_equired (2) For each of the three investments, determine the income amount for each scal year. (2) Income 2015 l 2020 Sprinkle Corp. is a small public company with a December 31 scal year-end. At the end of 2016, the company had $150 million of excess cash. The board of directors decided that the company should hold the funds until the right business opportunity appeared, rattler than pay out the funds to its shareholders and then have to issue shares to obtain the nancing later. The board directed management to invest the funds in a diversied portfolio of debt instruments. As a result, on January 1, 2017, management purchased $50 million of short-ten" government bonds, $50 million of medium-term government bonds, and $50 million of high-quality corporate bonds (The amounts are face values, not investment cost.) The following table provides additional information about these investments. (Click the icon to view the investment data.) R_equired (3) For each of the three investments, determine the eect on other comprehens'we income (OCI) for each scal year. (Enter a \"0" in the appropriate input cell if OCI in unaffected. Use a minus sign or parentheses to show a decrease in OCI.) (3) CC! 2018 2020 m oL....u.- L-.- Sprinkle Corp. is a small public company with a December 31 scal year-end. At the end of 2016, the company had $150 million of excess cash. The board of directors decided that the company should hold the funds until the right business opportunity appeared, rattler than pay out the funds to its shareholders and then have to issue shares to obtain the nancing later. The board directed management to invest the funds in a diversied portfolio of debt instruments. As a result, on January 1, 2017, management purchased $50 million of short-ten" government bonds, $50 million of medium-term government bonds, and $50 million of high-quality corporate bonds. (The amounts are face values, not investment cost.) The following table provides additional information about these investments. (Click the icon to view the investment data.) R_equired (4) Show the balance of the accumulated other comprehensive income component of equity for each of the three investments at the end of each scal year. (Enter a "0" in the appropriate input cell for any zero-balances. Use a minus sign or parentheses to show a cumulative loss in 00L) (4)Accumulated OCI component of equity 2015 2017 Sprinkle Corp. is a small public company with a December 31 fiscal year-end. At the end of 2016, the company had $150 million of excess cash. The board of directors decided that the company should hold the funds until the right business opportunity appeared, rather than pay out the funds to its shareholders and then have to issue shares to obtain the financing later. The board directed management to invest the funds in a diversified portfolio of debt instruments. As a result, on January 1, 2017, management purchased $50 million of short-term government bonds, $50 million of medium-term government bonds, and $50 million of high-quality corporate bonds. (The amounts are face values, not investment cost.) The following table provides additional information about these investments. (Click the icon to view the investment data.) Required Requirement d. Had Sprinkle classified the medium-term government bonds and the corporate bonds as amortized cost financial assets, how much would have been the total amount of income over the five years for each of the type of bonds? Medium-term government bonds Corporate bonds (Amortized cost) (Amortized cost) Cumulative income 2017-2021Sprinkle Corp. is a small public company with a December 31 scal yearend. At the end of 2016, the company had $150 million of excess cash. The board of directors decided that the company should hold the funds until the right business opportunity appeared, rather than pay out the funds to its shareholders and then have to issue shares to obtain the nancing later. The board directed management to invest the funds in a diversied portfolio of debt instruments. As a result, on January 1, 2017, management purchased $50 million of short-term government bonds. $50 million of medium-term government bonds, and $50 million of highquality corporate bonds. (The amounts are face values, not investment cost.) The following table provides additional information about these investments (Click the icon to view the investment data.) Muired Cumulat'we income 2017-2021 Requirement e. Had Sprinkle classified the medium-term government bonds and the corporate bonds as FVPL nancial assets. how much would have been the total amount of income over the ve years for each of the type of bonds? What would be different under this scenario? Begin by showing how much the total amount of income over the ve years would have been for each type of bond had Sprinkle classied the medium-term government bonds and the corporate bonds as FVPL nancial assets. Cumulative income 2017-2021 What would be different under this scenario? 0 A. The balance sheet asset would be reported at historical cost instead of at fair value, and the amounts shown as OCI in requirement 0 would instead be reported through income. 0 B. The amounts shown as OCI in requirement 0 would instead be reported through income. 0 C. The balance sheet asset would be reported at historical cost instead of at fair value. 0 D. There would be no differences in any of the balance sheet, income, and/or annual effect on OCI amounts currently shown in requirement c. i Investment data - X Medium-term Short-term government government bonds bonds Corporate bonds Face value $50,000,000 $50,000,000 $50,000,000 Coupon rate 6% 5% 8% Yield 6% 4% 11% Maturity Jan. 1, 2019 Jan. 1, 2022 Jan. 1, 2022 Interest frequency Annual Annual Annual Accounting classification Amortized cost FVOCI FVOCI Investment cost ? ? ? Market value, Dec. 31, 2017 $ 49,800,000 $ 50,800,000 $ 49,300,000 Market value, Dec. 31, 2018 $ 50,000,000 $ 50,600,000 $ 49,400,000 Market value, Dec. 31, 2019 $ 50,510,000 $ 50,400,000 Market value, Dec. 31, 2020 50,490,000 $ 50,490,000 Market value, Dec. 31, 2021 - $ 50,000,000 $ 50,000,000 Print Done
