Exam 2: Non-Current Financial Liabilities

A $100,000 5-year 7% bond is issued on January 1, 2020. The bond pays interest annually. The market rate is 6%. What is the selling price of the bonds, rounded to nearest dollar?

What is a bond indenture?

A $100,000 5-year 7% bond is issued on January 1, 2020. The bond pays interest annually. The market rate is 6%. What is the selling premium or discount on the bonds, rounded to nearest dollar?

A $100,000 5-year 7% bond is issued on January 1, 2020. The bond pays interest annually. The market rate is 8%. What is the selling price of the bonds, rounded to nearest dollar?

Which statement is correct about the derecognition of a matured obligation?

Canadian Sea Rides Ltd. issues $8,000,000 of four-year, 4% bonds dated January 1, 2020. Interest is payable on January 1 and July 1 each year. The proceeds realized from the issue were the $8,529,082 sales price less the $50,000 fee charged by Sea's lawyers. Sea's year-end is December 31. Required: Prepare entries for a. The issuance of the bonds. b. Payment of interest and related amortization on July 1, 2021. c. Accrual of interest and related amortization on December 31, 2021.

A $100,000 5-year 6% bond is issued on January 1, 2020. The bond pays interest annually. The market rate is 8%. What is the selling price of the bonds, rounded to nearest dollar?

On May 1, 2020, VeryFine LTD. provides a vendor with a $18,000 non-interest-bearing note due on May 1, 2021 in exchange for furniture with a list price of $17,400. At what amount will the property be recorded in the accounting records? The company's banker has suggested that an appropriate market rate is 6% per annum for loans that mature in one year or less and 8% for loans with longer maturities.

Which statement best explains a "leveraged buyout"?

Define the following: -A mortgage

Which statement is not correct about financial leverage for a $300,000 investment versus a $100,000 investment?

On May 5, 2020, Bennix sold $1,000,000 of five-year, 3% bonds for $900,500. From the proceeds, the company paid fees of 100,000. Interest is payable semi-annually on May 5 and November 5. What is the effective rate of interest (round to 2 decimal places)?

Which statement is correct about the derecognition of an obligation before maturity?

Define the following: -Perpetual bonds

What are "serial bonds"?

On May 1, 2020, Sea Escape Ltd. purchases a new automobile for $18,000 from the dealer who provides the financing. The three-year, interest-free loan is repayable at $500 per month. The market rate of interest for similar transactions is 0.25% per month. Required: Prepare journal entries to record: a. the purchase of the automobile. b. the accrual of interest and the loan payment at the end of May 2020.

Explain 3 instances when the fair value of the non-current liability will not equal the cash proceeds.

What is meant by the "spread" charged by banks on loans?

Which statement is correct about offsetting?

On June 1, 2020, ABC LTD. provides a vendor with an $18,500 non-interest-bearing note due on June 1, 2021, in exchange for furniture with a list price of $18,100. At what amount will the property be recorded in the accounting records? The company's banker has suggested that an appropriate market rate is 12% per annum for loans that mature in one year or less and 15% for loans with longer maturities.