Debt in anticipation of making settlement payments

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Reference no: EM133307199

Questions

1. The PetTech technology has malfunctioned on numerous occasions, creating a great deal of confusion (but luckily no deaths of pets or humans). You do, expect, however, that the technology will need to be scrapped and that there will be lawsuits as well. Make any necessary journal entries.

2. IdeaTech wants to issue debt in anticipation of making settlement payments to those customers negatively impacted by PetTech. They want to push off the payments as long as possible. What advice would you give them for how to structure the bonds?

3. Assume you structure the bonds using the advice from above. The company wants to receive groceeds of $1 million and their market rate of interest is 7%. Provide the neoessaryjournal entry both for the day of issue and six months later.

4. Classify all cash amounts from #8 as CFO, CFI or OFF.

Reference no: EM133307199

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