Assume that on January 1, year 1, XYZ Corporation issued 1,000 nonqualified stock options with an estimated value of $4 per option.Each option entitles the owner to purchase one share of XYZ stock for $14 a share (the per share price of XYZ stock on January 1, year1, when the options were granted). The options vest 25 percent a year (on December 31) for four years (beginning with year 1). All 500stock options that had vested to that point were exercised in year 3 when the XYZ stock was valued at $20 per share. No otheroptions were exercised in year 3 or year 4.Identify XYZ's year 1, 2, 3, and 4 tax deductions and book-tax difference (identify as favorable or unfavorable and as permanent ortemporary) associated with the stock options.Note: Leave no answer blank. Enter zero if applicable and select "Not Applicable" if no effect.Temporary differencesPermanent differencesBook-TaxdifferencesYear 1Favorable orUnfavorableTemporary orPermanentBook-TaxdifferencesYear 2Favorable orUnfavorableTemporary orPermanentBook-TaxdifferencesYear 3Favorable orUnfavorableTe

"Since you have asked two independent questions, the first question was answered for you. If you…

Answered: Assume that on January 1, year 1, XYZ…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Nolan Corporation has outstanding convertible bonds with a face value of $15,000 and a current book value of $17,500. Each $1,000 bond is convertible into 25 shares of common stock (par value $5 per share). All the bonds are converted into common stock on June 1 when the market value of Nolan’s common stock is $50 per share. Required: Using the book value method, prepare the journal entry for Nolan to record the conversion.
Please fill pictures out: Tyrell Company Issued callable bonds with a par value of $16,000. The call option requires Tyrell to pay a call premium of $500 plus par (or a total of $16,500) to bondholders to retire the bonds. On July 1, Tyrell exercises the call option. The call option Is exerased after the semannual interest Is paid the day before on June 30. Record the entry to retire the bonds under each separate situation 1. The bonds have a carrying value of $13,500. 2 The bonds have a carrying value of $17,000.
On July 1 of Year 1, Salem Corporation authorized $1,900,000 of 7% bonds due in 10 years. The bonds pay cash interest semiannually each June 30 and December 31. Each $1,000 bond includes a detachable stock purchase warrant. Each warrant gives the bondholder the right to purchase, for $30, one share of $1 par value common stock at any time during the next 10 years. The bonds were sold at 101 on July 1 of Year 1. The value of the stock purchase warrants at the time of issuance was $95,000. The bonds would sell without warrants at $ $1,843,000. Please avoid answers in image format thank you
Jaenda Inc. issued $5,000,000 of convertible 5-year bonds on July 1, 2020. The bonds provide for 6% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $120,000, which is being amortized monthly on a straight-line basis.The bonds are convertible after one year into 15 shares of Volker Inc.'s $1 par value common stock for each $1,000 of bonds.On October 1, 2021, $600,000 of bonds were turned in for conversion into common stock. Interest has been accrued monthly and paid as due. At the time of conversion, any accrued interest on bonds being converted is paid in cash. Instructions Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates. (Round to the nearest dollar.) a. October 1, 2021. (Assume the book value method is used.) b. October 31, 2021. c. December 31, 2021, including closing entries for end-of-year.
On February 3, Year 1, Teel Corporation enters into a subscription contract with several subscribers for 7,000 shares of $5 par common stock at a price of $15 per share. The contract requires a down payment of 25%, with the remaining balance to be paid on May 3, Year 1. The stock will be issued to each subscriber upon full payment. The May 3 receipt of the full remaining balance from subscribers. The market price is currently $16 per share
On January 1, 2019, Roosevelt Company purchased 12% bonds having a maturity value of $600,000 for $637,907.40. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2019, and mature January 1, 2024, with interest received December 31 of each year. Assume that Roosevelt elected the fair value option for this held-for-collection investment. Instructions (a). Prepare any entries necessary at December 31, 2019, assuming the fair value of the bonds is $640,000. (b). Prepare any entries necessary at December 31, 2020, assuming the fair value of the bonds is $625,000.
Bundle Company issues 1,000,000 par value 10 year bonds at 102 on January 1, 2018, which Mega Corporation purchased. The coupon rate on the bonds is 9%. Interest payment are made semiannually in July 1 and January 1. On July 1, 2021, Parent Company purchased 500,000 par value of the bonds from Mega Corporation for 492,200. Bundle Company owns 65% of A Company's voting shares. During 2021, Bundle Company recorded an interest income on yhe aforementioned bonds payable of 23,100, while A Company recorded an interest expese of 44,000, in ehich 22,000 was incurred from July 1 to December 31. B Company has a comprehensive income of 500,000 while A Company has 150,000. No other intercompany transaction occurred during 2021. Assume straight-line amortization. Compute for the gain on extinguishment of bonds to be recognized in the 2021 consolidated statement of comprehensive income. Compute the comprehensive income assigned to the controlling interest for 2021. Compute the comprehensive…
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On July 1 of the current year, West Company purchased for cash, 8, $10,000 bonds of North Corporation to yield 10%. The bonds pay 9% interest, payable on a semiannual basis each July 1 and January 1, and mature in three years on July 1. The bonds are classified as held-to-maturity securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium.Note: When answering the following questions, round answers to the nearest whole dollar. Amortization Schedule Journal Entries in Year 1 Financial Statement Presentation Journal Entries in Year 2 b. Record the entry for the purchase of the bonds by West Company on July 1. Date Account Name Debit Credit Jul. 1, Year 1 Answer Answer To record investment purchase. c. Record the adjusting entry by West Company on December 31. The fair value of the bonds at December 31 was $81,000.

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