Claremont Inc. issued a $400,000 bond on January 1, 2020. The bond had a five-year life and an 8% stated rate of interest. The bond contract requires Claremont to pay semiannual dividends each June 30 and December 31. The market rate of interest on January 1, 2020 when Claremont issued the bond was 6%.   Required: 1. Use Excel to determine the cash proceeds from the bond issue on January 1, 2020. 2. Use Excel to construct a bond amortization table for the five-year life of the bond. 3. Record the journal entries for the bond in 2020. 4. Report the effects of the bond on the 2020 income statement and cash flows statement and the balance sheet on December 31, 2020

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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.