User Account

All Pages

Determine the issue price of the bonds

Assignment Help Accounting Basics
Reference no: EM132702402

Question - ABC Inc. had a new plant constructed having 10-year life and zero salvage value. In order to raise the funds required for the project, the company issued 10-year 8% $1,000 bonds in the market with a total face value of $13,560,000. The market rate was 5% and interest was payable on June 30 and December 31. The plant was funded from the proceeds obtained by issuing the bonds. ABC Inc. uses IFRS for financial reporting purposes.

Required - Use this information to answer Questions (i) - (iv) below.

i] Determine the issue price of the bonds. Prepare the journal entries, in proper format, required on January 1, 2016 to record the issue of the bonds. Show your work in detail.

ii] Prepare the journal entries, in proper format, required on December 31, 2018, to record the interest on the bond issue.

iii] Determine the amounts of the bond payable outstanding on December 31, 2016 and show, in good format, how it will be reported.

Now, assume that on January 1, 2019, ABC Inc. retires 30% of the bonds payable. The bond holders agree to accept, instead of cash, 20 common shares in exchange for each $1,000 bond. The shares of ABC Inc. were being traded on that date at $65 per share. There is no interest due on the bonds as all interest was already recorded/paid on December 31, 2018.

iv] Prepare the journal entry as at January 1, 2019, to record this transaction as per IFRS requirements.

Reference no: EM132702402

Questions Cloud

Negotiate for object or service outside of class : Negotiate for an object or service outside of class. This object or service should be something you had planned to obtain or have been planning to obtain.
Prepare the required adjusting journal entries : Electricity and other utilities' invoices received after the cut-off date $30,000. Prepare the required adjusting journal entries and explain the treatment
What types of communication flows are evident : What types of communication flows are evident in your workplace (or former workplace)? Is the workplace more consistent with a flat or horizontal organization?
Emphasis of business education demanded : What are the main points of emphasis of business education demanded by companies in the U.S. versus other major industrial countries?
Determine the issue price of the bonds : Determine the issue price of the bonds. Prepare the journal entries, in proper format, required on January 1, 2016 to record the issue of the bonds
The value of studying ethics in leadership : Traditional leadership theories and moral standards are not adequate to help employees solve complex organizational issues.
Leadership intervention reflection paper : You were also instructed to identify interventions developed by different leaders in the film. Which leadership intervention has impressed you the most?
Swot analysis is strategic planning tool : A SWOT analysis is a strategic planning tool that organizations utilize to identify their strengths, weaknesses, opportunities, and threats (SWOT)
Ethical challenges faced by your organization : Propose your findings on the ethical challenges faced by your organization in recent history and the near future.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much revenue and gross profit should hawkins recognize

Hawkins Construction Co. appropriately uses the percentage-of completion method. How much revenue and gross profit should Hawkins recognize in the first year of the project?

  At what amount should land be debited

Lumpsum, Inc., purchased land and two buildings at a total cost of $28,000. At what amount should Land be debited

  Determine the price of the bonds at January

International Foods issued 10% bonds, dated January 1, with a face amount of $140 million on January 1, Determine the price of the bonds at January

  Allowance for doubtful accounts

Abrat Company failed to accrue an allowance for doubtful accounts of $13,500 in its Year 1 financial statements. Upon discovery of this error in Year 2, what correcting journal entry will Abrat Company make? Ignore income taxes

  If the columns of a trial balance total to the same

If the columns of a trial balance total to the same amount the information included in the accounts must be correct. Do you agree or disagree?

  Describe the asb clarity projec

Do you think the IRS's requirement of paid tax preparers having to have a PTIN will make a difference in terms of crooked tax preparers?

  Compute the total shareholders equity

The retained earnings balance on December 31, 2016 is P350,000. Compute for the total shareholders' equity of Blazing Red Corporation

  Identify the major stakeholders if the plant accountant

wilkens company uses the lifo method for inventory costing. in an effort to lower net income company president lenny

  Problem - Disclosing Aggressive Tax Positions

Does ASC 740-10 still leave room for ethical decision making by management in determining how to report uncertain tax positions? Explain

  Calculate total cost of good sold and gross profit from sale

Calculate the total cost of goods sold and gross profit from the sale of infant formula powder for the month ended 31 October 2019.

  How much net income should be distributed to Chen and Monroe

Chen and Monroe had $90,000 and $140,000, respectively, How much net income should be distributed to Chen and Monroe

  How do prepare the journal entry at date of bond purchase

Prepare the journal entry at the date of the bond purchase. (Enter answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented)

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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