ssuance and Interest Amortization for Zero Coupon Note (Straight Line) Kerwin Company borrowed $10,000 on a 2-year, zero coupon note. The note was issued on January 1, 2024. The face amount of the note, $12,544, is to be paid at maturity on December 31, 2025. Required: 1. Assuming straight line amortization, calculate the interest expense for 2024 and 2025. $fill in the blank 316d63fd3fc8024_1 2. Prepare the entries to recognize the borrowing, the first year's interest expense, and the second year's interest expense plus redemption of the note at maturity. If an amount box does not require an entry, leave it blank. 2024 Jan. 1 - Select - - Select - - Select - - Select - - Select - - Select - Record issuance of note at discount 2024 Dec. 31 - Select - - Select - - Select - - Select - Record interest expense 2025 Dec. 31 - Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select - Record interest expense and repayment of note principal
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:
ssuance and Interest Amortization for Zero Coupon Note (Straight Line)
Kerwin Company borrowed $10,000 on a 2-year, zero coupon note. The note was issued on January 1, 2024. The face amount of the note, $12,544, is to be paid at maturity on December 31, 2025.
Required:
1. Assuming straight line amortization, calculate the interest expense for 2024 and 2025.
$fill in the blank 316d63fd3fc8024_1
2. Prepare the entries to recognize the borrowing, the first year's interest expense, and the second year's interest expense plus redemption of the note at maturity. If an amount box does not require an entry, leave it blank.
| 2024 Jan. 1 |
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- Select - | - Select - |
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- Select - | - Select - | |
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- Select - | - Select - | |
| Record issuance of note at discount | |||
| 2024 Dec. 31 |
|
- Select - | - Select - |
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|
- Select - | - Select - | |
| Record interest expense | |||
| 2025 Dec. 31 |
|
- Select - | - Select - |
|
|
- Select - | - Select - | |
|
|
- Select - | - Select - | |
|
|
- Select - | - Select - | |
| Record interest expense and repayment of note principal |
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