1. Convertible bonds and stock warrants. For each of the unrelated transactions described below‚ present the entry(ies) required to record the bond transactions. 1. On August 1‚ 2011‚ Lane Corporation called its 10% convertible bonds for conversion. The $8‚000‚000 par bonds were converted into 320‚000 shares of $20 par common stock. On August 1‚ there was $700‚000 of unamortized premium applicable to the bonds. The fair market value of the common stock was $20 per share. Ignore all interest payments
Premium Generally Accepted Accounting Principles Corporate finance Taxation
1. A change in the amortization rate for an intangible asset should be accounted for as a a. change in accounting principle. b. change in reporting entity. c. correction of an error. d. change in accounting estimate d 2. Wriglee‚ Inc. went to court this year and successfully defended the brand name of its product‚ "Sweet Gum‚" from infringement by a competitor. The cost of this defense should be charged to a. patents and amortized over the legal life of the patent. b. legal fees and amortized
Premium Bond Balance sheet Tax
1. Walker Corporation issued 14%‚ 5-year bonds with a par value of $5‚000‚000 on January 1‚ 2010. Interest is to be paid semiannually on each June 30 and December 31. The bonds were issued at $5‚368‚035 cash when the market rate for this bond is 12% (a) Prepare the general journal entry to record the issuance of the bonds on January 1‚ 2010. (b) Show how the bonds would be reported on Walker ’s balance sheet at January 1‚ 2010. (c) Assume instead that Walker uses the straight-line method for amortizing
Premium Stock Stock market Preferred stock
1. (TCO D) The printing costs and legal fees associated with the issuance of bonds should (Points : 5) be expensed when incurred. be reported as a deduction from the face amount of bonds payable. be accumulated in a deferred charge account and amortized over the life of the bonds. not be reported as an expense until the period in which the bonds mature or are retired. Question 2. 2. (TCO D) A debt instrument with no ready market is exchanged for property whose
Premium Bond Interest
Governmental and Nonprofit Accounting: Theory and Practice‚ 10e (Freeman) Problems – Chapter 7 Problem 1 – Bond Anticipation Notes Green Mountain County had the following transactions related to the issuance of its bond anticipation notes. All amounts are in thousands of dollars. Transactions: 1. The county issued $5‚000 of 6-month‚ 6% bond anticipation notes (BANs) on March 1‚ 20X5. The proceeds will be used to begin construction of a major courthouse addition and improvement. 2. Prepare any entries
Premium Liability Generally Accepted Accounting Principles Asset
Problems (5-5) A Treasury bond that matures in 10 years has a yield of 6%. A 10-year corporate bond has a yield of 9%. Assume that the liquidity premium on the corporate bond is 0.5%. What is the default risk premium on the corporate bond? Maturity = 10 years rtbond = 6% rcbond = 9% liquidity premium = 0.5% rd= r* + IP + DRP + LP + MRP Default Risk Premium (DRP) = 9% - 6% + 0.5% = 2.5% (5-7) Renfro Rentals has issued bonds that have a 10% coupon rate‚ payable semiannually. The bonds mature in 8 years‚ have
Premium Bond Bonds Yield
Serial Bond Debt Service Fund Journal Entries and Financial Statements. As of December 31‚ 2010‚ New Town had $9‚500‚000 in 4.5 percent serial bonds outstanding. Cash of $509‚000 is the debt service fund’s only asset as of December 31‚ 2010‚ and there are no liabilities. The serial bonds pay interest semiannually on January 1 and July 1‚ with $500‚000 in bonds being retired on each interest payment date. Resources for payment of interest are transferred from the General Fund and the debt service
Premium Bond Balance sheet Finance
Visit Free Slides and Ebooks : http://downloadslide.blogspot.com CHAPTER 16 Dilutive Securities and Earnings Per Share ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics 1. Convertible debt and preference shares. Warrants and debt. Share options‚ restricted share. Earnings Per Share (EPS)—terminology. EPS—Determining potentially dilutive securities. EPS—Treasury share method. EPS—Weightedaverage computation. EPS—General objectives. EPS—Comprehensive calculations. EPS—Contingent shares. Convergence
Premium Corporate finance Bond Stock market
BV*i (interest expense + interest payable) o Next Year’s payment: payment is the same. Write down BV amount equal to payment (sum of interest expense + interest payable) Operating Costs o o o o o o o o Adjust for this year’s expense and bills unpaid o Wage’s payable Adjust for utilities and any expenses not mentioned (assume same % allocation from last year) Insurance adjustments (some to prepaid some to WIP – USE WIP %) Rental adjustments (use WIP%) Wages payable has a debit entry to DL Production
Premium Stock Dividend Depreciation
SAMPLE EXAM. PROBLEM 1 (20 POINTS) 1. Compute the issue price of the bonds on January 1‚ 2010. (3 points) 2. Complete the amortization schedule below for the dates indicated. (3 points) DATE CASH INTEREST EXPENSE AMORTIZATION BOOK VALUE 1/1/10 12/31/10 3. Prepare all necessary journal entries‚ from issuance through the January 1‚ 2011 bond retirement. (14 points) Date Account Debit Credit
Premium Stock Stock market Bond