The following information was taken from the footnotes to Johnson & Johnsons 2012 financial statements (dollars in

The following information was taken from the footnotes to Johnson & Johnson’s 2012 financial statements (dollars in millions):

REQUIRED:
a. Which amounts appeared on Johnson & Johnson’s balance sheet and where?
b. What is a zero coupon debenture, and how does the effective interest rate affect the debenture? Explain.
c. Which of the long-term debts above were issued at face value (i.e., sold at par)?
d. Is the face value of the 6.95 percent notes due 2029 greater than, less than, or equal to the balance sheet value? Explain.

Transcribed Image Text:

Zero coupon debentures due 2020 (Dollars in Millions) 0.70% Notes due 2013 3.80% Debentures due 2013 1.20% Notes due 2014 2.15% Notes due 2016 5.55% Debentures due 2017 5.15% Debentures due 2018 4.75% Notes due 2019 2.95% Debentures due 2020 3.55% Notes due 2021 6.73% Debentures due 2023 5.50% Notes due 2024 6.95% Notes due 2029 4.95% Debentures due 2033 5.95% Notes due 2037 5.85% Debentures due 2038 4.50% Debentures due 2040 4.85% Notes due 2041 Other Total Less current portion S205 2012 500 500 898 1,000 898 1,321 542 446 250 803 296 500 995 700 539 298 1,311 $13,001 (1,512) $11,489 3.00 Effective Rate % 0.75 3.82 1.24 2.22 5.55 5.15 5.83 3.15 3.67 6.73 6.75 7.14 4.95 5.99 5.86 4.63 4.89