Exam 14: Bonds and Long-Term Notes

Patrick Rach International issued 5% bonds convertible into shares of the company's common stock.Rach applies International Financial Reporting Standards (IFRS).Upon issuance,Patrick Rach International should record:

On January 1,2016,Ozark Minerals issued $20 million of 9%,10-year convertible bonds at 101.The bonds pay interest on June 30 and December 31.Each $1,000 bond is convertible into 40 shares of Ozark's no par common stock.Bonds that are similar in all respects,except that they are nonconvertible,currently are selling at 99.Ozark applies International Financial Reporting Standards (IFRS).Upon issuance,Ozark should:

On January 1,2016,Bell Co.issued $10 million of 10-year convertible bonds at 105.On January 1,2021,the bonds were converted into common stock with a market value of $11 million.Upon conversion,Bell would recognize:

On September 1,2016,Blue Co. ,issued $1,600,000 of its 10% bonds at 98 plus accrued interest.The bonds are dated June 1,2016,and mature on May 30,2026.Interest is payable semiannually on June 1 and December 1.At the time of issuance,Blue would receive cash of:

When bonds are sold at a discount and the effective interest method is used,at each interest payment date,the interest expense:

Patrick Rach International issued 5% bonds convertible into shares of the company's common stock.Rach applies U.S.GAAP.Upon issuance,Patrick Rach International should record:

Griggs Co.failed to amortize the premium on an outstanding five-year bond issue.What is the resulting effect on interest expense and the bond book value,respectively?

The unamortized balance of discount on bonds payable is reported in the balance sheet as:

Use the following to answer questions Lopez Plastics Co.(LPC)issued callable bonds on January 1,2016.LPC's accountant has projected the following amortization schedule from issuance until maturity: -LPC calls the bonds at 103 immediately after the interest payment on 12/31/2017 and retires them.What gain or loss,if any,would LPC record on this date?

On June 30,2016,K Co.had outstanding 9%,$10,000,000 face value bonds maturing on June 30,2021.Interest is payable semiannually every June 30 and December 31.On June 30,2016,after amortization was recorded for the period,the unamortized bond premium and bond issue costs were $60,000 and $100,000,respectively.On that date,K acquired all its outstanding bonds on the open market at 98 and retired them.At June 30,2016,what amount should K Co.recognize as gain on redemption of bonds before income taxes?

On June 30,2016,Hardy Corporation issued $10 million of its 8% bonds for $9.2 million.The bonds were priced to yield 10%.The bonds are dated June 30,2016,and mature on June 30,2026.Interest is payable semiannually on December 31 and July 1.If the effective interest method is used,by how much should the bond discount be reduced for the six months ended December 31,2016?

Assuming that Auerbach issued the bonds for $255,369,000,what would the company report for its net bond liability balance at December 31,2016,rounded up to the nearest thousand?

Determine the price of a $500,000 bond issue under each of the following independent assumptions:

Distinguish between: (a)Secured and unsecured bonds. (b)Coupon and registered bonds.

What would be the total interest cost of the bonds over their full term?

An investor purchases a 20-year,$1,000 par value bond that pays semiannual interest of $40.If the semiannual market rate of interest is 5%,what is the current market value of the bond?

An amortization schedule for bonds issued at a premium:

The interest rate that is printed on the bond certificate is referred to as any of the following except:

During the year,Hamlet Inc.paid $20,000 to have bond certificates printed and engraved,paid $100,000 in legal fees,paid $10,000 to a CPA for registration information,and paid $200,000 to an underwriter as a commission.What is the amount of bond issue costs?

Crawford Inc.has bonds outstanding during a year in which the general (risk-free)rate of interest has risen.Crawford elected the fair value option for the bonds upon issuance.What will the company report for the bonds in its income statement for the year?