A bond is known as a fixed income instrument because interest is paid at a fixed rate to bondholders which is also known as Coupon rate. It can be defined as an instrument of indebtedness which is issued by companies to the holders who are called as bond holders. They are part of corporate debt as they are issued by companies and are known as tradable assets. To find: Whether bonds are sold at discount or premium.

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Answer 1

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Chapter 8, Problem 8.4E

a.

To determine

Introduction: A bond is known as a fixed income instrument because interest is paid at a fixed rate to bondholders which is also known as Coupon rate. It can be defined as an instrument of indebtedness which is issued by companies to the holders who are called as bond holders. They are part of corporate debt as they are issued by companies and are known as tradable assets.

To find: Whether bonds are sold at discount or premium.

b.

To determine

Introduction: Interest expense arises out of a company that finances its capital through debt or leases. It is a cost incurred to a company for its borrowed fund which is fixed in nature.

To find: Whether annual interest payment will be less or more than interest expense.

c.

To determine

Introduction: Intra group transactions are the transactions which occur between two companies of the industry, instead of showing separate financial statement for two companies a single consolidated financial statement is prepared which constitute assets, liabilities, expenses, incomes of both companies.

The effect of intercompany bond holding on consolidate net income.

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A parent company buys bonds on the open market that had been previously issued by its subsidiary. The price paid by the parent is less than the carrying amount of the bonds on the subsid-iary’s records. How should the parent report the difference between the price paid and the carrying amount of the bonds on its consolidated financial statements?a. As a loss on retirement of the bonds.b. As a gain on retirement of the bonds.c. As an increase to interest expense over the remaining life of the bonds.d. Because the bonds now represent intra-entity debt, the difference is not reported

23.ABC Company acquired bonds for their par value between the date of interest collection. Accrued interest Select one: a. decrease the payment made to the seller. b. They represent an interest income that will be recorded on the date of interest collection. c. they are part of the payment made to the seller. d. they represent an expense in the acquisition of those bonds.

Oblivion Company purchased bonds at a discount of P100,000. Subsequently, the entity sold bonds at a premium of P140,000. During the period that the entity held this investment, amortization of the discount amounted to P20,000. What amount should be reported as gain on sale of bonds? a.120,000b.220,000c.240,000d.260,000

Answer 2

Question

Chapter 8, Problem 8.4E

a.

To determine

Introduction: A bond is known as a fixed income instrument because interest is paid at a fixed rate to bondholders which is also known as Coupon rate. It can be defined as an instrument of indebtedness which is issued by companies to the holders who are called as bond holders. They are part of corporate debt as they are issued by companies and are known as tradable assets.

To find: Whether bonds are sold at discount or premium.

b.

To determine

Introduction: Interest expense arises out of a company that finances its capital through debt or leases. It is a cost incurred to a company for its borrowed fund which is fixed in nature.

To find: Whether annual interest payment will be less or more than interest expense.

c.

To determine

Introduction: Intra group transactions are the transactions which occur between two companies of the industry, instead of showing separate financial statement for two companies a single consolidated financial statement is prepared which constitute assets, liabilities, expenses, incomes of both companies.

The effect of intercompany bond holding on consolidate net income.

Expert Solution & Answer

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Answer 3

Question

Chapter 8, Problem 8.4E

a.

To determine

Introduction: A bond is known as a fixed income instrument because interest is paid at a fixed rate to bondholders which is also known as Coupon rate. It can be defined as an instrument of indebtedness which is issued by companies to the holders who are called as bond holders. They are part of corporate debt as they are issued by companies and are known as tradable assets.

To find: Whether bonds are sold at discount or premium.

b.

To determine

Introduction: Interest expense arises out of a company that finances its capital through debt or leases. It is a cost incurred to a company for its borrowed fund which is fixed in nature.

To find: Whether annual interest payment will be less or more than interest expense.

c.

To determine

Introduction: Intra group transactions are the transactions which occur between two companies of the industry, instead of showing separate financial statement for two companies a single consolidated financial statement is prepared which constitute assets, liabilities, expenses, incomes of both companies.

The effect of intercompany bond holding on consolidate net income.

Expert Solution & Answer

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Answer 4

Question

Chapter 8, Problem 8.4E

a.

To determine

Introduction: A bond is known as a fixed income instrument because interest is paid at a fixed rate to bondholders which is also known as Coupon rate. It can be defined as an instrument of indebtedness which is issued by companies to the holders who are called as bond holders. They are part of corporate debt as they are issued by companies and are known as tradable assets.

To find: Whether bonds are sold at discount or premium.

b.

To determine

Introduction: Interest expense arises out of a company that finances its capital through debt or leases. It is a cost incurred to a company for its borrowed fund which is fixed in nature.

To find: Whether annual interest payment will be less or more than interest expense.

c.

To determine

Introduction: Intra group transactions are the transactions which occur between two companies of the industry, instead of showing separate financial statement for two companies a single consolidated financial statement is prepared which constitute assets, liabilities, expenses, incomes of both companies.

The effect of intercompany bond holding on consolidate net income.

Expert Solution & Answer

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Answer 5

Chapter 8, Problem 8.4E

a.

To determine

Introduction: A bond is known as a fixed income instrument because interest is paid at a fixed rate to bondholders which is also known as Coupon rate. It can be defined as an instrument of indebtedness which is issued by companies to the holders who are called as bond holders. They are part of corporate debt as they are issued by companies and are known as tradable assets.

To find: Whether bonds are sold at discount or premium.

b.

To determine

Introduction: Interest expense arises out of a company that finances its capital through debt or leases. It is a cost incurred to a company for its borrowed fund which is fixed in nature.

To find: Whether annual interest payment will be less or more than interest expense.

c.

To determine

Introduction: Intra group transactions are the transactions which occur between two companies of the industry, instead of showing separate financial statement for two companies a single consolidated financial statement is prepared which constitute assets, liabilities, expenses, incomes of both companies.

The effect of intercompany bond holding on consolidate net income.

Answer 6

Chapter 8, Problem 8.4E

a.

To determine

Introduction: A bond is known as a fixed income instrument because interest is paid at a fixed rate to bondholders which is also known as Coupon rate. It can be defined as an instrument of indebtedness which is issued by companies to the holders who are called as bond holders. They are part of corporate debt as they are issued by companies and are known as tradable assets.

To find: Whether bonds are sold at discount or premium.

Answer 7

Chapter 8, Problem 8.4E

a.

To determine

Introduction: A bond is known as a fixed income instrument because interest is paid at a fixed rate to bondholders which is also known as Coupon rate. It can be defined as an instrument of indebtedness which is issued by companies to the holders who are called as bond holders. They are part of corporate debt as they are issued by companies and are known as tradable assets.

To find: Whether bonds are sold at discount or premium.

Answer 8

b.

To determine

Introduction: Interest expense arises out of a company that finances its capital through debt or leases. It is a cost incurred to a company for its borrowed fund which is fixed in nature.

To find: Whether annual interest payment will be less or more than interest expense.

Answer 9

b.

To determine

Introduction: Interest expense arises out of a company that finances its capital through debt or leases. It is a cost incurred to a company for its borrowed fund which is fixed in nature.

To find: Whether annual interest payment will be less or more than interest expense.

Answer 10

c.

To determine

Introduction: Intra group transactions are the transactions which occur between two companies of the industry, instead of showing separate financial statement for two companies a single consolidated financial statement is prepared which constitute assets, liabilities, expenses, incomes of both companies.

The effect of intercompany bond holding on consolidate net income.

Answer 11

c.

To determine

Introduction: Intra group transactions are the transactions which occur between two companies of the industry, instead of showing separate financial statement for two companies a single consolidated financial statement is prepared which constitute assets, liabilities, expenses, incomes of both companies.

The effect of intercompany bond holding on consolidate net income.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 8 - Prob. 8.1Q Ch. 8 - What is meant by a constructive bond retirement in...Ch. 8 - Prob. 8.3Q Ch. 8 - Prob. 8.4Q Ch. 8 - When a parent company sells land to a subsidiary...Ch. 8 - Prob. 8.7Q Ch. 8 - Prob. 8.8Q Ch. 8 - Prob. 8.9Q Ch. 8 - Prob. 8.10Q Ch. 8 - Prob. 8.11Q

Solution Summary: The author explains that a fixed income instrument is an instrument of indebtedness issued by companies to the holders of bonds.

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Introduction: Interest expense arises out of a company that finances its capital through debt or leases. It is a cost incurred to a company for its borrowed fund which is fixed in nature.

To find: Whether annual interest payment will be less or more than interest expense.

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Chapter 8 Solutions

Solution Summary: The author explains that a fixed income instrument is an instrument of indebtedness issued by companies to the holders of bonds.

Videos

Introduction: Interest expense arises out of a company that finances its capital through debt or leases. It is a cost incurred to a company for its borrowed fund which is fixed in nature. To find: Whether annual interest payment will be less or more than interest expense.

Want to see the full answer?

Chapter 8 Solutions

Introduction: Interest expense arises out of a company that finances its capital through debt or leases. It is a cost incurred to a company for its borrowed fund which is fixed in nature.

To find: Whether annual interest payment will be less or more than interest expense.