Accrue and measure such interest payment obligations

Assignment Help Financial Accounting

Reference no: EM13792248

James Olds buys a four-year, $1,000,000 certificate of deposit from the Second National Bank. James will receive 5% interest in year 1; 5.5% in year 2; 6% in year three; and 6.5% interest in year 4. If James redeems this certificate before the maturity date, he would receive a cumulative 4.5% annual rate of interest of 4.5%. The Bank has ascertained that less than one percent of its depositors redeem their certificates before the maturity date. The bank asks its accountant how to accrue and measure such interest payment obligations.

Reference no: EM13792248

Questions Cloud

Average cost per motor at this level of activity : This motor has recently become available from an outside supplier for $24.25 per motor. If Barrus decides not to make the motors, none of the fixed manufacturing overhead would be avoidable and there would be no other use for the facilities.

Companys overall net operating income : Lusk Company produces and sells 16,100 units of Product X each month. The selling price of Product X is $31 per unit, and variable expenses are $25 per unit. A study has been made concerning whether Product X should be discontinued.

Considering eliminating department-contribution margin : Fabio Corporation is considering eliminating a department that has a contribution margin of $22,000 and $78,000 in fixed costs. Of the fixed costs, $24,000 cannot be avoided. The effect of eliminating this department on Fabio's overall net operating ..

Amount of simons casualty loss deduction-how is deducted : Simon Samson runs a catering business, Simple Simons, out of his home. He uses the same kitchen for his business and for personal purposes. The business use of the kitchen is 60% and the personal use is 40%. On July 4, Simple Simons had an explosion ..

Accrue and measure such interest payment obligations : James Olds buys a four-year, $1,000,000 certificate of deposit from the Second National Bank. James will receive 5% interest in year 1; 5.5% in year 2; 6% in year three; and 6.5% interest in year 4. If James redeems this certificate before the maturi..

Segment in preparing its external financial statements : The Treasury Department of Drof Motors invests excess funds daily (e.g., in foreign currencies). It, thus, earns profits and losses, which are included in the company’s consolidated financial statements. Should Drof consider its Treasury operations a..

Consolidated financial statement reflect the value : Tony Computer Services Corporation trades 50% of its common stock for the rights to certain computer programs of the Janet Corporation. Janet previously expensed such costs of developing these computer programs.

Repays the required interest costs as scheduled : The Builtwell Construction Company is building a hospital for a third party. As such it borrows substantial funds from a foreign bank and repays the required interest costs as scheduled. Builtwell also incurs some foreign currency truncation gains an..

Indifferent between modifying the product : X Company is considering a modification to one of its main products next year that would make it more attractive to customers. As a result, X Company could increase the selling price by $2.92. However, fixed costs would increase to $15,450. At what u..

User Account

All Pages