The Plaid Company acquired a $1 million face value bond that has a 12% coupon rate (pays interest annually on December 31) on January 1, 2017. The bond matures on December 31, 2022. On January 1, 2017, the market yield for bonds of equivalent risk and maturity was 10%. Required CER Requirement a. How much did Plaid pay for this bond on January 1, 2017? (Enter all currency amounts in dollars, not in millions. Use a financial calculator for all present value computations. Enter your final answer as a positive number, and round to the nearest whole dollar.) Amount required to purchase bonds Requirement b. On December 31, 2017, the market yield for bonds of equivalent risk and maturity is 11%. What would be the market value of this bond on December 31, immediately after the coupon payment on that date? (Enter all currency amounts in dollars, not in millions. Use a financial calculator for all present value computations. Enter your final answer as a positive number, and round to the nearest whole dollar.) Market value of bonds on Dec 31, 2017 Requirement c. On December 31, 2018, the market yield for bonds of equivalent risk and maturity is 12%. What would be the market value of this bond on December 31, immediately after the coupon payment on that date? (Enter all currency amounts in dollars, not in millions. Use a financial calculator for all present value computations. Enter your final answer as a positive number, and round to the nearest whole dollar.) Market value of bonds on Dec 31, 2018 Requirement d. Assume each of three scenarios: the bond is to be () amortized cost, () FVOCI, or (i) FVPL: (1) How much would the balance sheet value of this bond be on December 31, 2017, and December 31, 2018? (2) How much income would be reported in 2017 and 2018 for this bond? (3) How much would OCI and accumulated OCI be for fiscal years 2017 and 2018? Before answering any of these three questions, let's complete an amortization schedule for the bond through December 31, 2018. (Round to the nearest whole dollar.) Interest Coupon End of year Beginning of year amortized cost yield payment = amortized cost Dec 31. 2017 2018 (1) How much would the balance sheet value of this bond be on December 31, 2017, and December 31, 2018? 0 (I) (iii) Amortized cost FVOCI FVPL Balance sheet at December 31, 2017 Balance sheet at December 31, 2018 (2) and (3) How much income would be reported in 2017 and 2018 for this bond? How much would OCI and accumulated OCI be for fiscal years 2017 and 2018? (Enter a "0" for any zero-balances. Use a minus sign or parentheses for a loss.) Begin by completing the analysis for 2017. 0 Amortized cost (ii) FVOCI (iii) FVPL 2017: Interest income Unrealized gain (loss) Total income - 2017 Other comprehensive income (OCI), 2017 Accumulated OCI, Dec 31, 2017 Comprehensive income - 2017 Now complete the analysis for 2018. (iii) Amortized cost FVOCI FVPL 2018 Interest income Unrealized gain (loss) Total income - 2018 Other comprehensive income (OCI), 2018 Accumulated OCI, Dec. 31, 2018 Comprehensive income - 2018 The Plaid Company acquired a $1 million face value bond that has a 12% coupon rate (pays interest annually on December 31) on January 1, 2017. The bond matures on December 31, 2022. On January 1, 2017, the market yield for bonds of equivalent risk and maturity was 10%. Required CER Requirement a. How much did Plaid pay for this bond on January 1, 2017? (Enter all currency amounts in dollars, not in millions. Use a financial calculator for all present value computations. Enter your final answer as a positive number, and round to the nearest whole dollar.) Amount required to purchase bonds Requirement b. On December 31, 2017, the market yield for bonds of equivalent risk and maturity is 11%. What would be the market value of this bond on December 31, immediately after the coupon payment on that date? (Enter all currency amounts in dollars, not in millions. Use a financial calculator for all present value computations. Enter your final answer as a positive number, and round to the nearest whole dollar.) Market value of bonds on Dec 31, 2017 Requirement c. On December 31, 2018, the market yield for bonds of equivalent risk and maturity is 12%. What would be the market value of this bond on December 31, immediately after the coupon payment on that date? (Enter all currency amounts in dollars, not in millions. Use a financial calculator for all present value computations. Enter your final answer as a positive number, and round to the nearest whole dollar.) Market value of bonds on Dec 31, 2018 Requirement d. Assume each of three scenarios: the bond is to be () amortized cost, () FVOCI, or (i) FVPL: (1) How much would the balance sheet value of this bond be on December 31, 2017, and December 31, 2018? (2) How much income would be reported in 2017 and 2018 for this bond? (3) How much would OCI and accumulated OCI be for fiscal years 2017 and 2018? Before answering any of these three questions, let's complete an amortization schedule for the bond through December 31, 2018. (Round to the nearest whole dollar.) Interest Coupon End of year Beginning of year amortized cost yield payment = amortized cost Dec 31. 2017 2018 (1) How much would the balance sheet value of this bond be on December 31, 2017, and December 31, 2018? 0 (I) (iii) Amortized cost FVOCI FVPL Balance sheet at December 31, 2017 Balance sheet at December 31, 2018 (2) and (3) How much income would be reported in 2017 and 2018 for this bond? How much would OCI and accumulated OCI be for fiscal years 2017 and 2018? (Enter a "0" for any zero-balances. Use a minus sign or parentheses for a loss.) Begin by completing the analysis for 2017. 0 Amortized cost (ii) FVOCI (iii) FVPL 2017: Interest income Unrealized gain (loss) Total income - 2017 Other comprehensive income (OCI), 2017 Accumulated OCI, Dec 31, 2017 Comprehensive income - 2017 Now complete the analysis for 2018. (iii) Amortized cost FVOCI FVPL 2018 Interest income Unrealized gain (loss) Total income - 2018 Other comprehensive income (OCI), 2018 Accumulated OCI, Dec. 31, 2018 Comprehensive income - 2018
