Lord Corporation acquired bonds with a face value of P3,000,000 for P2,800,000 on January 1, 2020. The bond has a stated interest of 10%, pays interest every December 31, and matures on December 31, 2022. Requirements: 1. Prepare the necessary journal entries to record the above transactions. 2. How much is the investment in bonds on December 31, 2020? 3. Assuming that the bond is a serial bond and the P1,000,000 matures every December 31. Prepare the journal entries to record the transactions. 4. The same information in No. 3, how much is the investment in bonds on December 31, 2020?
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Lord Corporation acquired bonds with a face value of P3,000,000 for P2,800,000 on January 1, 2020. The bond has a stated interest of 10%, pays interest every December 31, and matures on December 31, 2022.
Requirements:
1. Prepare the necessary
2. How much is the investment in bonds on December 31, 2020?
3. Assuming that the bond is a serial bond and the P1,000,000 matures every December 31.
Prepare the journal entries to record the transactions.
4. The same information in No. 3, how much is the investment in bonds on December 31, 2020?
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