Fair value December 31, 2020 Cost Aura Company ordinary Bora Company preference Cara Company bonds 600,000 350,000 500,000 650,000 200,000 400,000 On October 1, 2021, the entity sold one-half of Aura Company ordinary for P375,000. On December 31, 2021, the fair value of the remaining securities was P800,000. Required: Puonoro journal entries to record the transactions.

Fair value December 31, 2020 Cost Aura Company ordinary Bora Company preference Cara Company bonds 600,000 350,000 500,000 650,000 200,000 400,000 On October 1, 2021, the entity sold one-half of Aura Company ordinary for P375,000. On December 31, 2021, the fair value of the remaining securities was P800,000. Required: Puonoro journal entries to record the transactions.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 4RE: Refer to the information in RE 13-3. Assume that on December 31, 2019, Wolfpack received interest on...

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Refer to the information in RE13-5. Assume that on June 30, Aggie received interest on the Smith Corporation bonds. Prepare the June 30 journal entries to record the receipt of the interest. On April 30, 2019, Aggie Corporation purchased Smith Corporation 10%, 5-years bonds with a face value of 12,000 at par plus four months of accrued interest. Prepare the April 30 journal entry to record the purchase of these available-for-sale securities.
During 2021, Anthony Company purchased debt securities as a long-term investment and classified them as trading. All securities were purchased at par value. Pertinent data are as follows: The net holding gain or loss included in Anthonys income statement for the year should be: a. 0 b. 3,000 gain c. 9,000 loss d. 12,000 loss
On January 1, 2019, Brewster Company issued 2,000 of its 5-year, 1,000 face value, 11% bonds dated January 1 at an effective annual interest rate (yield) of 9%. Brewster uses the effective interest method of amortization. On December 31, 2023, Brewster extinguished the 2,000 bonds early through acquisition in the open market for 1,980,000. On July 1, 2022, Brewster issued 5,000 of its 6-year, 1,000 face value, 10% convertible bonds dated July 1 at an effective annual interest rate (yield) of 12%. The bonds are convertible at the option of the investor into Brewsters common stock at a ratio of 10 shares of common stock for each bond. Brewster uses the effective interest method of amortization. On July 1, 2023, an investor in Brewsters convertible bonds tendered 1,500 bonds for conversion into 15,000 shares of Brewsters common stock, which had a market value of 105 per share at the date of the conversion. Required: 1. Using the information about Brewster, answer the following questions: a. Were the 11% bonds issued at par, at a discount, or at a premium? Why? b. Is the amount of interest expense for the 11% bonds using the effective interest method of amortization higher in the first or second year of the life of the bond issue? Why? 2. Using the information about Brewster, explain the following: a. How is a gain or loss on early extinguishment of debt determined? Does the early extinguishment of the 11% bonds result in a gain or loss? Why? b. How does Brewster report the early extinguishment of the 11% bonds on the 2023 income statement? 3. Based on the information provided about Brewster, answer the following questions: a. Does recording the conversion of the 10% convertible bonds into common stock under the book value method affect net income? What is the rationale for the book value method? b. Does recording the conversion of the 10% convertible bonds into common stock under the market value method affect net income? What is the rationale for the market value method?
Refer to the information in RE13-5. Assume that on December 31, 2019, the investment in Smith Corporation bonds has a market value of 12,500. Prepare the year-end journal entry to record the unrealized gain or loss.
Transfer between Categories On December 31, 2018, Leslie Company held an investment in bonds of Kaufmann Company which it categorized as being held to maturity. At that time, the 8%, 100,000 face value bonds had a carrying value of 107,023.56 and were being amortized using the effective interest method based on a market rate of 7%. Interest on these bonds is paid annually each December 31. On December 31, 2019, after recording the interest earned, Leslie decided to reclassify the Kaufmann bonds to its available-for-sale category in anticipation of a major restructuring. At that time, the ending quoted market price for the bonds was 105,000. Required: Prepare the journal entries on December 31, 2019, to record the interest earned and the reclassification.
Mills Company had five convertible securities outstanding during all of 2019. It paid the appropriate interest (and amortized any related premium or discount using the straight-line method) and dividends on each security during 2019. Each convertible security is described in the following table. The corporate income tax rate is 30%. Required: 1. Prepare a schedule that lists the impact of the assumed conversion of each convertible security on diluted earnings per share. 2. Prepare a ranking of the order in which the securities would be included in the diluted earnings per share computations.
Refer to the information in RE 13-3. Assume that on December 31, 2019, Wolfpack received interest on the Todd Corporation bonds. Wolfpack uses the straight-line method to amortize premiums and discounts. Prepare the December 31 journal entry to record the receipt of the interest. On July 1, 2019, Wolfpack Corporation purchases securities which it intends to buy and sell frequently. These securities consisted of todd Corporation 10%, 5-year bonds with a face value of 20,000 which were purchased for 18,500. Prepare the july 1 journal entry to record the purchase of these trading securities.
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On January 1, 2021, Jeremiah Company purchased trading equity investments which are irrevocably designated at FVPL: Security Purchase price Transaction costs Fair value, Dec. 31, 2021 A P1,000,000 P100,000 P1,500,000 B 2,000,000 200,000 2,400,000 C 4,000,000 400,000 4,700,000 On July 5, 2021, the entity sold Security C amounting to P5,200,000. Requirements: Determine the unrealized gain/loss on December 31, 2021? Determine the net gain/loss reported on the income statement on December…
On October 1, 2021, POGI Company purchased 4,000 of the P1,000 face amount, 10% bonds of GANDA Company for P4,462,500 which included accrued interest of P200,000. The bonds which mature on January 1, 2028, pay interest semiannually on January 1 and July 1. The entity used the straight-line method of amortization and appropriately recorded the bonds as financial asset at amortized cost. What is the carrying amount of the bonds on December 31, 2021? Your answer
On December 31, 2021, Kona purchased debt securities as trading securities. Pertinent data are as follows:\\n Fair Value\\nSecurity Cost At 12/31/22\\nA $225,000 $215,000\\nB 200,000 210,000\\nC 230,000 210,000\\nOn December 31, 2022, Kona transferred its investment in security C from trading to available‐for‐sale\\nbecause Kona intends to retain security C as a long‐term investment. What total amount of gain or loss on\\nits securities should be included in Kona's income statement for the year ended December 31, 2022?
On January 1, 2024, Everglade Company purchased the following debt securities and properly accounted for them as securities available-for-sale: Security Cost Fair Value, 12/31/2024 ABC $ 58,000 $ 74,800 DEF 91,800 83,000 XYZ 34,000 39,800 All declines in value are considered temporary. What amount should the Everglade Company report relative to these securities in its 2024 statement of other comprehensive income? Multiple Choice $0. $22,600 unrealized holding gain. $13,800 net unrealized holding gain. $8,800 unrealized holding loss.