Intermediate Accounting: Reporting and Analysis (Looseleaf)

3rd Edition

ISBN: 9781337788311

Author: WAHLEN

Publisher: Cengage

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Textbook Question

Chapter 14, Problem 2C

One way for a corporation to accomplish long-term financing is through the issuance of long-term debt instruments in the form of bonds.

Required:

1. Explain how to account for the proceeds from bonds issued with detachable stock purchase warrants.
2. Contrast a serial bond with a term (straight) bond.
3. For a 5-year term bond issued at a premium, why is the amortization in the first year of the life of the bond different using the interest method of amortization as opposed to the straight-line method? Include in your discussion whether the amount of amortization in the first year of the life of the bond is higher or lower using the interest method as opposed to the straight-line method.
4. When a company sells a bond issue between interest dates at a discount, what journal entry does it make, and how is the subsequent amortization of bond discount affected? Include in your discussion an explanation of how the amounts of each debit and credit are determined.
5. Explain how to account for and classify the gain or loss from the reacquisition of a long-term bond prior to its maturity.

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Chapter 14, Problem 1C

Chapter 14, Problem 3C

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Chapter 14 Solutions

Intermediate Accounting: Reporting and Analysis (Looseleaf)

Ch. 14 - Prob. 1GI Ch. 14 - Why does issuing debt result in an income tax...Ch. 14 - At the beginning of 2018, corporate tax rates...Ch. 14 - What is a bond? Define face value, maturity date,...Ch. 14 - What is the difference between a mortgage bond and...Ch. 14 - Prob. 6GI Ch. 14 - Prob. 7GI Ch. 14 - Prob. 8GI Ch. 14 - Prob. 9GI Ch. 14 - Prob. 10GI

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Solution Summary: The author explains the difference between a serial bond and the term straight bond.

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