Chapter 10: Q14DQ (page 473)
Question: Refer to Apple’s annual report in Appendix A. Is there any indication that Apple has issued long-term debt?
Answer
Yes, there are indication of long term debt shown in the balance sheet and statement of cash flows.
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Citywide Company issues bonds with a par value of $150,000 on their stated issue date. The bonds mature in five years and pay 10% annual interest in semiannual payments. On the issue date, the annual market rate for the bonds is 8%.
1. What is the amount of each semiannual interest payment for these bonds?
2. How many semiannual interest payments will be made on these bonds over their life?
3. Use the interest rates given to determine whether the bonds are issued at par, at a discount, or at a premium.
4. Compute the price of the bonds as of their issue date.
5. Prepare the journal entry to record the bonds’ issuance
Ellis issues 6.5%, five-year bonds dated January 1, 2017, with a \(250,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of \)255,333. The annual market rate is 6% on the issue date. Required
Tano issues bonds with a par value of \(180,000 on January 1, 2017. The bonds’ annual contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and the bonds are sold for \)170,862.
1. What is the amount of the discount on these bonds at issuance?
2. How much total bond interest expense will be recognized over the life of these bonds?
3. Prepare an amortization table like the one in Exhibit 10.7 for these bonds; use the straight-line method to amortize the discount
What is the main difference between notes payable and bonds payable?
Question: When can a lease create both an asset and a liability for the lessee?
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