On January 1, 2022, Investor Limited Purchased a bond with the following characteristics: - Face Value of $60,000 with a coupon rate of 6% per annum - Interest Paid semi-annually on June 30 and December 31 - Maturity date: December 31, 2026 The bonds were priced to yield 8%, Investor Limited paid $55,133 At December 31, 2022, the bonds had a fair value of $59,000 Required Assume that investor limited decides to account for this bond investment using FVOCI. Prepare the 2022 journal entries related to this bond investment. Assume that Investor Limited sells $45,000 face value of the bonds on January 1,2023. Proceeds from selling these bonds were $44,000. Prepare the journal entry for the sale of the bonds. Please, do the 2 questions
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:
On January 1, 2022, Investor Limited Purchased a bond with the following characteristics:
- Face Value of $60,000 with a coupon rate of 6% per annum
- Interest Paid semi-annually on June 30 and December 31
- Maturity date: December 31, 2026
The
At December 31, 2022, the bonds had a fair value of $59,000
Required
- Assume that investor limited decides to account for this bond investment using FVOCI. Prepare the 2022 journal entries related to this bond investment.
- Assume that Investor Limited sells $45,000 face value of the bonds on January 1,2023. Proceeds from selling these bonds were $44,000. Prepare the
journal entry for the sale of the bonds.
Please, do the 2 questions!
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