Determine the income and unrealized holding gain

Assignment Help Accounting Basics
Reference no: EM132637509

Question - On January 1, 2000, $1,000,000 of 10% debenture bonds were acquired by Means Corporation at $927,908, which would yield a 12% rate of return. The bonds mature on December 31, 2004. Interest is paid annually on December 31. Means Corporation classifies these securities as available-for-sale securities. Shown below are the effective interest rate and market value of the securities at various dates.

Date

Effective Interest

Market Value

December 31, 2000

11%

$968,975

December 31, 2001

9%

$1,025,310

December 31, 2002

12%

$966,195

December 31, 2003

9%

$1,009,173

Required -

1. Using the method suggested by Kathryn Means (i.e., use the current interest rate for the recognition of income and determination of fair value with the holding gain component going to owners ' equity), determine the income and unrealized holding gain components for the years 2000 through 2004 (assume that the interest rate change occurs on each December 31).

2. Make the entries that result from assuming that these debenture bonds were Means Corporation ' s only available-for-sale securities.

Reference no: EM132637509

Questions Cloud

Develop a parallel program : Develop a parallel program to find a given element in an unsorted array (a large number of elements starting from 10K
User-defined function that performs case : Write down your user-defined function that performs case insensitive string comparison similar to strcmp(char S1[ ], char S2[ ]).
How much profit will earn from each bottle : You will sell this bottle of water for $1.50 How much profit will you earn from each bottle. Estimate the cost to manufacture a bottle of water
Giorgio discrete event simulator : Describe the events associated with the activity on each device including arrival, use and exit.
Determine the income and unrealized holding gain : Determine the income and unrealized holding gain components for the years 2000 through 2004 (assume that the interest rate change occurs on each December 31)
Openmp program to perform matrix multiplication : OpenMP program to perform matrix multiplication. Compare the time of parallel execution with sequential execution.
Calculate the amount of moh applied to the special order : Calculate the amount of MOH applied to the special order from the Cooking department and Finishing department. Complete a job cost forms for the special order.
Evaluate the usability aspect of design : After the requirement analysis, you made some paper prototype and will evaluate the usability aspect of your design
Crow foot national soccer league database system description : Please create high level ERD using notation conceptual model for the National Soccer League (NSL) database system using the description given below.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd