Problem 5-15 (Static) Bonds and leases; deferred annuities (LO5-3, 5-8, 5-10] On the last day of its fiscal year ending December 31, 2024, the Safe & Reliable (S&R) Glass Company completed two financing arrangements. The funds provided by these initiatives will allow the company to expand its operations. 1. S&R issued 8% stated rate bonds with a face amount of $100 million. The bonds mature on December 31, 2044 (20 years). The market rate of interest for similar bond issues was 9% (4.5% semiannual rate). Interest is paid semiannually (4%) on June 30 and December 31, beginning on June 30, 2025. 2. The company leased two manufacturing facilities. Lease A requires 20 annual lease payments of $200,000 beginning on January 1, 2025. Lease B also is for 20 years, beginning January 1, 2025. Terms of the lease require 17 annual lease payments of $220,000 beginning on January 1, 2028. Generally accepted accounting principles require both leases to be recorded as liabilities for the present value of the scheduled payments. Assume that a 10% interest rate properly reflects the time value of money for the lease obligations. Required: What amounts will appear in S&R's December 31, 2024, balance sheet for the bonds and for the leases? Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Bond liability Lease A liability Lease B liability
Problem 5-15 (Static) Bonds and leases; deferred annuities (LO5-3, 5-8, 5-10] On the last day of its fiscal year ending December 31, 2024, the Safe & Reliable (S&R) Glass Company completed two financing arrangements. The funds provided by these initiatives will allow the company to expand its operations. 1. S&R issued 8% stated rate bonds with a face amount of $100 million. The bonds mature on December 31, 2044 (20 years). The market rate of interest for similar bond issues was 9% (4.5% semiannual rate). Interest is paid semiannually (4%) on June 30 and December 31, beginning on June 30, 2025. 2. The company leased two manufacturing facilities. Lease A requires 20 annual lease payments of $200,000 beginning on January 1, 2025. Lease B also is for 20 years, beginning January 1, 2025. Terms of the lease require 17 annual lease payments of $220,000 beginning on January 1, 2028. Generally accepted accounting principles require both leases to be recorded as liabilities for the present value of the scheduled payments. Assume that a 10% interest rate properly reflects the time value of money for the lease obligations. Required: What amounts will appear in S&R's December 31, 2024, balance sheet for the bonds and for the leases? Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Bond liability Lease A liability Lease B liability
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ashavinbhai
![Problem 5-15 (Static) Bonds and leases; deferred annuities [LO5-3, 5-8, 5-10]
On the last day of its fiscal year ending December 31, 2024, the Safe & Reliable (S&R) Glass Company completed two financing
arrangements. The funds provided by these initiatives will allow the company to expand its operations.
1. S&R issued 8% stated rate bonds with a face amount of $100 million. The bonds mature on December 31, 2044 (20 years). The
market rate of interest for similar bond issues was 9% (4.5% semiannual rate). Interest is paid semiannually (4%) on June 30 and
December 31, beginning on June 30, 2025.
2. The company leased two manufacturing facilities. Lease A requires 20 annual lease payments of $200,000 beginning on
January 1, 2025. Lease B also is for 20 years, beginning January 1, 2025. Terms of the lease require 17 annual lease payments of
$220,000 beginning on January 1, 2028. Generally accepted accounting principles require both leases to be recorded as
liabilities for the present value of the scheduled payments. Assume that a 10% interest rate properly reflects the time value of
money for the lease obligations.
Required:
What amounts will appear in S&R's December 31, 2024, balance sheet for the bonds and for the leases?
Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Use tables, Excel, or a
financial calculator. (FV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1)
Bond liability
Lease A liability
Lease B liability](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb118157e-b74a-4ce3-8c5b-5d72e545d5f9%2F173ecb44-c849-4740-b893-c65e2ebc3e95%2F4g9t2pp_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 5-15 (Static) Bonds and leases; deferred annuities [LO5-3, 5-8, 5-10]
On the last day of its fiscal year ending December 31, 2024, the Safe & Reliable (S&R) Glass Company completed two financing
arrangements. The funds provided by these initiatives will allow the company to expand its operations.
1. S&R issued 8% stated rate bonds with a face amount of $100 million. The bonds mature on December 31, 2044 (20 years). The
market rate of interest for similar bond issues was 9% (4.5% semiannual rate). Interest is paid semiannually (4%) on June 30 and
December 31, beginning on June 30, 2025.
2. The company leased two manufacturing facilities. Lease A requires 20 annual lease payments of $200,000 beginning on
January 1, 2025. Lease B also is for 20 years, beginning January 1, 2025. Terms of the lease require 17 annual lease payments of
$220,000 beginning on January 1, 2028. Generally accepted accounting principles require both leases to be recorded as
liabilities for the present value of the scheduled payments. Assume that a 10% interest rate properly reflects the time value of
money for the lease obligations.
Required:
What amounts will appear in S&R's December 31, 2024, balance sheet for the bonds and for the leases?
Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Use tables, Excel, or a
financial calculator. (FV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1)
Bond liability
Lease A liability
Lease B liability
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