User Account

All Pages

Prepare any journal entries required on January

Assignment Help Accounting Basics
Reference no: EM132933266

Question - On January 1, 2020, Stanger Corp. paid $101,400 to acquire $100,000 of Mega Inc.'s bonds maturing on December 31, 2024. The bonds pay 6% interest semi-annually on June 30 and December 31. Stanger acquired the bonds with a view to profiting in the near term from a decline in the market rate of interest. On January 31, the market price of the bonds dropped to $92,500, due to a decline in Mega's credit quality.

Stanger's year end is December 31 and prepares its financial statements in accordance with IFRS. The company prepares all necessary adjustments and accruals relating to its investment at each month end.

Required -

a) How should Stanger classify this investment?

b) At initial recognition, what is the effective interest rate, per period, that Stanger is earning on its investment? Round to five significant decimal places.

c) Prepare the journal entry to recognize this investment on January 1, 2020.

d) Prepare any journal entries required on January 31, 2020, by Stanger pertaining to this investment.

Reference no: EM132933266

Questions Cloud

Calculate the amount of impairment loss for the cgu : Calculate the amount of impairment loss for the CGU that would be determined and prepare the journal entries in accordance with the requirements of AASB 136
Calculate the amount of the impairment loss : Calculate the amount of the impairment loss that is able to be reversed by Oak Ltd at 30 June 20X8, in accordance with the requirements of AASB 136
How revenues and expenses are grouped for planning : Imagine you are a clinical manager of a Health Care primary, Explain how revenues and expenses are grouped for planning and control in the financial statements
Business analyst in the contemporary business environment : Project Delivery - Reflect on the role of a Business Analyst in the contemporary business environment and society more broadly
Prepare any journal entries required on January : Stanger Corp. paid $101,400 to acquire $100,000 of Mega Inc.'s bonds maturing on December 31, 2024. Prepare any journal entries required on January
What is the current price of the bonds : Today, the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they now have 14 years to maturity
What is the carrying amount of the financial asset : The bonds mature on December 31, 2020 and pay interest of 10% annually every December 31 with a 12% effective yield. What is the carrying amount
What is mpi times-interest-earned ratio : What is MPI's times-interest-earned (TIE) ratio? MPI Incorporated has $8 billion in assets, and its tax rate is 35%. Its basic earning power (BEP) ratio is 10%
Determine the net present value of the proposed expansion : Adam Smith Inc. has a target debt-equity ratio. Use the weighted average cost of capital approach to determine the net present value of the proposed expansion.

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.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  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!

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