Round your answer to the nearest dollar, such as 12345. (No need to write $ as $ is already in front of the box.) (Allowance is set + or - $1.) Use the effective interest rate method. The following information pertains to a bond issue of the VWX Corporation: Maturity value: $1,000,000 Maturity date: December 31, 2023 Stated interest rate (Coupon rate): 5.25% Interest payments are made annually on December 31st
Round your answer to the nearest dollar, such as 12345. (No need to write $ as $ is already in front of the box.) (Allowance is set + or - $1.) Use the effective interest rate method. The following information pertains to a bond issue of the VWX Corporation: Maturity value: $1,000,000 Maturity date: December 31, 2023 Stated interest rate (Coupon rate): 5.25% Interest payments are made annually on December 31st
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
5
![On December 31, 2021, when the market interest rate (=the yield to maturity) of the bond is 4.20%, VWX de-
recognized entire bond by paying the market value + $5,000.
Determine the amount of the gain or loss on the bond de-recognition. Assume the coupon is paid before the bond
de-recognition, and the bond was completely repurchased on 12/31/2021.
(If it is a loss, express the amount by a negative number using - sign in front of the amount, such as -123.)
%24](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4427b40b-8ff0-45e6-86a6-64b52116971c%2F1a634303-80c7-4bc5-87e6-3a2d9f2e9f96%2Fvcj0r5_processed.png&w=3840&q=75)
Transcribed Image Text:On December 31, 2021, when the market interest rate (=the yield to maturity) of the bond is 4.20%, VWX de-
recognized entire bond by paying the market value + $5,000.
Determine the amount of the gain or loss on the bond de-recognition. Assume the coupon is paid before the bond
de-recognition, and the bond was completely repurchased on 12/31/2021.
(If it is a loss, express the amount by a negative number using - sign in front of the amount, such as -123.)
%24
![Round your answer to the nearest dollar, such as 12345. (No need to write $ as $ is already in front of the box.)
(Allowance is set + or - $1.)
Use the effective interest rate method.
The following information pertains to a bond issue of the VWX Corporation:
Maturity value: $1,000,000
Maturity date: December 31, 2023
Stated interest rate (Coupon rate): 5.25%
Interest payments are made annually on December 31st
Date of issue: January 1, 2016
Effective (market) interest rate (Yield to maturity) at issue: 4.75%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4427b40b-8ff0-45e6-86a6-64b52116971c%2F1a634303-80c7-4bc5-87e6-3a2d9f2e9f96%2F9l8kpkn_processed.png&w=3840&q=75)
Transcribed Image Text:Round your answer to the nearest dollar, such as 12345. (No need to write $ as $ is already in front of the box.)
(Allowance is set + or - $1.)
Use the effective interest rate method.
The following information pertains to a bond issue of the VWX Corporation:
Maturity value: $1,000,000
Maturity date: December 31, 2023
Stated interest rate (Coupon rate): 5.25%
Interest payments are made annually on December 31st
Date of issue: January 1, 2016
Effective (market) interest rate (Yield to maturity) at issue: 4.75%
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education