User Account

All Pages

The cortland bonds have a stated interest rate

Assignment Help Accounting Basics
Reference no: EM13881510

1.On January 1, 2013, Ithaca Corp. purchases Cortland Inc. bonds that have a face value of $150,000. The Cortland bonds have a stated interest rate of 6%. Interest is paid semiannually on June 30 and December 31, and the bonds mature in 10 years. For bonds of similar risk and maturity, the market yield on particular dates is as follows:

January 1, 2013 ......... 7.0%
June 30, 2013 ........... 8.0%
December 31, 2013 ........ 9.0%

Required:
1. Calculate the price Ithaca would have paid for the Cortland bonds on January 1, 2013 (ignoring brokerage fees), and prepare a journal entry to record the purchase.
2. Prepare all appropriate journal entries related to the bond investment during 2013, assuming Ithaca accounts for the bonds as a held to maturity investment. Ithaca calculates interest revenue at the effective interest rate as of the date it purchased the bonds.
3. Prepare all appropriate journal entries related to the bond investment during 2013, assuming that Ithaca chose the fair value option when the bonds were purchased, and that Ithaca determines fair value of the bonds semiannually. Ithaca calculates interest revenue at the effective interest rate as of the date it purchased the bonds.

Reference no: EM13881510

Questions Cloud

Marlon using the equity method : On January 2, 2013, Miller Properties paid $19 million for 1 million shares of Marlon Company's 6 million outstanding common shares.
How do environmental factors affect response rates : How do environmental factors affect response rates in personal interviews? How can we overcome these environmental problems?
Compute one irr value : This project has two IRR's, namely  percent and  percent, in order from smallest to largest. (Note: If you can only compute one IRR value, you should input that amount into both answer boxes in order to obtain some credit.) (Negative amount should be..
Write down assembly program that calculates grade of student : Given a numeric score of a student, write down an assembly program that calculates the grade of the student as follows: if Score >= 90 then Grade = 1 else if Score >= 80 then Grade = 2 else Grade = 3 Program
The cortland bonds have a stated interest rate : 1.On January 1, 2013, Ithaca Corp. purchases Cortland Inc. bonds that have a face value of $150,000.
The president of gentiva health services : The president of Gentiva Health Services is considering increasing her number of Medicare patients served next year. However, to do so she must begin to use RNs for client visits, which Medicare reimburses at $45 per visit. An RN costs $35 per hour v..
First law of thermodynamics : A species in an ecosystem that plays a central role in the health of that ecosystem, and whose removal may cause the collapse of the ecosystem, is called a(n)
What is commonly seen on a real ticket machine : Algorithmic refinement the second stage in which the purchase of tickets is distributed across a number of events with actions that are typical of what is commonly seen on a real ticket machine.
Write a project on risk allocation in construction contract : Write a project on Risk Allocation in Construction contract.In the project, involve parties either provide their own labor or the labor of others in order to carry out different operations related with a construction project carried out at a large sc..

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