Redemption of Bonds IVESTER Company issued $450,000 face value bonds at a premium of $10,500. The bonds contain a call provision of 102. IVESTER decides to redeem the bonds due to a significant decline in interest rates. On that date, IVESTER had amortized only $6.100 of the premium. Required: 1. Calculate the gain or loss on the early redemption of the bonds. Enter the amount as positive number. Round your answer to the nearest whole dollar. 2. Calculate the gain or loss on the redemption assuming that the call provision is 99 instead of 102. Enter the amount as positive number. Round your answer to the nearest whole dollar. 3. Select where the gain or loss should be presented on the financial statements. 4. Why is the call price is normally higher than 100? Bonds are redeemed early only if it is advantageous to the To compensate the i for forgone interest, as well as for the costs and inconvenience involved, the I price is normally set at an amount higher than 100.
Redemption of Bonds IVESTER Company issued $450,000 face value bonds at a premium of $10,500. The bonds contain a call provision of 102. IVESTER decides to redeem the bonds due to a significant decline in interest rates. On that date, IVESTER had amortized only $6.100 of the premium. Required: 1. Calculate the gain or loss on the early redemption of the bonds. Enter the amount as positive number. Round your answer to the nearest whole dollar. 2. Calculate the gain or loss on the redemption assuming that the call provision is 99 instead of 102. Enter the amount as positive number. Round your answer to the nearest whole dollar. 3. Select where the gain or loss should be presented on the financial statements. 4. Why is the call price is normally higher than 100? Bonds are redeemed early only if it is advantageous to the To compensate the i for forgone interest, as well as for the costs and inconvenience involved, the I price is normally set at an amount higher than 100.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Redemption of Bonds
IVESTER Company issued $450,000 face value bonds at a premium of $10,500. The bonds contain a call provision of 102. IVESTER decides to redeem the bonds due to a significant decline in interest rates. On that date, IVESTER had amortized only $6,100 of the premium.
Required:
1. Calculate the gain loss on the early redemption of the bonds. Enter the amount positive number. Round your answer to the nearest whole dollar.
2. Calculate the gain or loss on the redemption assuming that the call provision is 99 instead of 102. Enter the amount as positive number. Round your answer to the nearest whole dollar.
3. Select where the gain or loss should be presented on the financial statements.
4. Why is the call price is normally higher than 100?
Bonds are redeemed early only if it is advantageous to the
. To compensate the
for forgone interest, as well as for the costs and inconvenience involved, the call price is normally set at an amount higher than 100.
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