Chapter 14: 5E (page 720)
Find the polynomials such that
Short Answer
Answer:The required polynomials are:
Chapter 14: 5E (page 720)
Find the polynomials such that
Answer:The required polynomials are:
All the tools & learning materials you need for study success - in one app.
Get started for freeQuestion: Potlatch Corporation has issued various types of bonds such as term bonds, income bonds, and debentures. Differentiate between term bonds, mortgage bonds, debentures bonds, income bonds, callable bonds, registered bonds, bearer or coupon bonds, convertible bonds, commodity-backed bonds, and deep discount bonds.
Question: Under IFRS, bonds issuance costs, including the printing costs and legal fees associated with the issuance, should be:
d.reported as an expense in the period the bonds mature or are redeemed.
(Amortization Schedule—Effective-Interest) Assume the same information as E14-6.
Instructions
Set up a schedule of interest expense and discount amortization under the effective-interest method. (Hint: The effective-interest rate must be computed.)
Question: The following information is taken from the 2017 annual report of Bugant, Inc. Bugant’s fiscal year ends December 31 of each year. Bugant’s December 31, 2017, balance sheet is as follows.
Bugant, Inc. Balance Sheet December 31, 2017 Assets Cash \( 450 Inventory 1,800 Total current assets 2,250 Plant and equipment 2,000 Accumulated depreciation (160) Total assets \)4,090 Liabilities Bonds payable (net of discount) \(1,426 Stockholders’ equity Common stock 1,500 Retained earnings 1,164 Total liabilities and stockholders’ equity \)4,090 Note X: Long Term Debt: On January 1, 2016, Bugant issued bonds with face value of \(1,500 and a coupon rate equal to 10%. The bonds were issued to yield 12% and mature on January 1, 2021. |
Additional information concerning 2018 is as follows.
Accounting
Prepare a balance sheet for Bugant, Inc. at December 31, 2018, and an income statement for the year ending December 31, 2018. Assume semiannual compounding of the bond interest.
Analysis
Use common ratios for analysis of long-term debt to assess Bugant’s long-run solvency. Has Bugant’s solvency changed much from 2017 to 2018? Bugant’s net income in 2017 was \)550 and interest expense was $169.
Principles
The FASB and the IASB allow companies the option of recognizing in their financial statements the fair values of their long-term debt. That is, companies have the option to change the balance sheet value of their long-term debt to the debt’s fair value and report the change in balance sheet value as a gain or loss in income. In terms of the qualitative characteristics of accounting information (Chapter 2), briefly describe the potential trade-off(s) involved in reporting long-term debt at its fair value.
Question: What is the “call” feature of a bond issue? How does the call feature affect the amortization of bond premium or discount?
What do you think about this solution?
We value your feedback to improve our textbook solutions.