Please question #4 of P9.26.Calculate the resulting gain or loss. What is the impact of the gain or loss on Bonds payable, Bond discount and Cash? Where will the gain/loss be reported n the company's statement of cash flows? , What is the balance sheet value of the lease asset and the lease liability?2 Why was the lease categorized as a finance lease?3 How much is interest expense in the first year?* What is the reduction in the lease liability in the first year?* What is the total expense if straight-line amortization is used for the leased asset?PROBLEMSO 26 Debt Valuation: Interest-Bearing Debentures, At the beginning of the year, Marshall Square, Inc. issued$100 million (maturity value) of 20-year debentures. The debentures carry a 4.75 percent annual coupon rate(compounded semi-annually) and interest payments are made semi-annually. The market rate of interest at thetime the debentures were issued was 5 percent.Required1. Calculate the proceeds received by Marshall Square when the bonds were sold.2. Explain why the Marshall Square bonds were sold at a discount.3. Calculate the market value of the bonds if, after five years, the market yield rate is four percent per period(i.e., 8% annually).4. Calculate the cost of retiring the Marshall Square bonds after 15 years assuming that the market yield rateis three percent per period (six percent annually) at the time of retirement. Calculate the resulting gain orloss. Where will the gain/loss be reported on the company's statement of cash flows?Debt Valuation: Zero-Coupon Debentures. At the beginning of the year, Park Inc. issued $150 million(maturity value) of 10-year, zero-coupon debentures, at a time when the yield rate was four percent annually.The Park, Inc. bonds would be subject to semiannual compounding.RequiredCaleulata tha nroceeds to be received by Park Inc. when the bonds are sold.that the

A debenture pays a regular interest rate or coupon rate return to investors

, What is the balance sheet value of the lease asset and the lease liability? 2 Why was the lease categorized as a finance lease? 1 How much is interest expense in the first year? 1 What is the reduction in the lease liability in the first year? s What is the total expense if straight-line amortization is used for the leased asset?

, What is the balance sheet value of the lease asset and the lease liability? 2 Why was the lease categorized as a finance lease? 1 How much is interest expense in the first year? 1 What is the reduction in the lease liability in the first year? s What is the total expense if straight-line amortization is used for the leased asset?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Please question #4 of P9.26.

Calculate the resulting gain or loss. What is the impact of the gain or loss on Bonds payable, Bond discount and Cash?

Where will the gain/loss be reported n the company's statement of cash flows?

, What is the balance sheet value of the lease asset and the lease liability?
2 Why was the lease categorized as a finance lease?
3 How much is interest expense in the first year?
* What is the reduction in the lease liability in the first year?
* What is the total expense if straight-line amortization is used for the leased asset?
PROBLEMS
O 26 Debt Valuation: Interest-Bearing Debentures, At the beginning of the year, Marshall Square, Inc. issued
$100 million (maturity value) of 20-year debentures. The debentures carry a 4.75 percent annual coupon rate
(compounded semi-annually) and interest payments are made semi-annually. The market rate of interest at the
time the debentures were issued was 5 percent.
Required
1. Calculate the proceeds received by Marshall Square when the bonds were sold.
2. Explain why the Marshall Square bonds were sold at a discount.
3. Calculate the market value of the bonds if, after five years, the market yield rate is four percent per period
(i.e., 8% annually).
4. Calculate the cost of retiring the Marshall Square bonds after 15 years assuming that the market yield rate
is three percent per period (six percent annually) at the time of retirement. Calculate the resulting gain or
loss. Where will the gain/loss be reported on the company's statement of cash flows?
Debt Valuation: Zero-Coupon Debentures. At the beginning of the year, Park Inc. issued $150 million
(maturity value) of 10-year, zero-coupon debentures, at a time when the yield rate was four percent annually.
The Park, Inc. bonds would be subject to semiannual compounding.
Required
Caleulata tha nroceeds to be received by Park Inc. when the bonds are sold.
that the

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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