tives Limited plans to Issue $550,000, 10-year, 6.50 percent bonds. Interest is payable annually on December 31. All of e Issued on January 1, 2022. Show how the bonds would be reported on the January 2, 2022, balance sheet if they ar 3.

tives Limited plans to Issue $550,000, 10-year, 6.50 percent bonds. Interest is payable annually on December 31. All of e Issued on January 1, 2022. Show how the bonds would be reported on the January 2, 2022, balance sheet if they ar 3.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 71E

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

E-Tech Initiatives Limited plans to issue $550,000, 10-year, 6.50 percent bonds. Interest is payable annually on December 31. All of the
bonds will be issued on January 1, 2022. Show how the bonds would be reported on the January 2, 2022, balance sheet if they are
Issued at 103.
E-TECH INITIATIVES LIMITED
Balance Sheet (partial)
As of January 2, 2022
Carrying Value
$
0

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