Bonds of affiliate purchased from non-affiliate: When an affiliate of issuer later acquires bonds from unrelated party, the bonds are retired at the time of purchase. The bonds are not held outside the consolidated entity. Once another company within the consolidated entity purchases them, it must be treated as repurchase by debtor. Acquisition of an affiliate’s bonds by another company with in affiliated entities is referred as constructive retirement. Although bonds are not actually retired. When constructive retirement occurs, the consolidated income statement reports gain or loss based on difference between carrying value and purchase price paid by affiliate to acquire it. And it is not reported in consolidated balance sheet either as bond payable or as investment because the bonds are no longer outstanding. To explain : The manner in which gain or loss on constructive retirement is computed using two companies trial balance when affiliate bonds are purchased form nonaffiliated in the beginning of the current year.

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 8, Problem 8.9Q

To determine

Bonds of affiliate purchased from non-affiliate: When an affiliate of issuer later acquires bonds from unrelated party, the bonds are retired at the time of purchase. The bonds are not held outside the consolidated entity. Once another company within the consolidated entity purchases them, it must be treated as repurchase by debtor. Acquisition of an affiliate’s bonds by another company with in affiliated entities is referred as constructive retirement. Although bonds are not actually retired.

When constructive retirement occurs, the consolidated income statement reports gain or loss based on difference between carrying value and purchase price paid by affiliate to acquire it. And it is not reported in consolidated balance sheet either as bond payable or as investment because the bonds are no longer outstanding.

To explain : The manner in which gain or loss on constructive retirement is computed using two companies trial balance when affiliate bonds are purchased form nonaffiliated in the beginning of the current year.

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Which of the following best describes the accounting for discounts and premiums for bonds purchased by a fiduciary for an estate? a. Premiums are amortized, but discounts are not. b. Discounts are amortized, but premiums are not. c. GAAP guidelines for amortization are followed, i.e., both are amortized. d. Like bonds purchased prior to the death, neither discounts nor premiums are amortized.

December 31, 2023. The effective interest rate is 8% considering the Interest is payable annually every December 31. The bonds mature on on January 1, 2021, Balibago Corporation purchased P1,000,000 10% bonds for P1,051,510 (including broker's commission of P20,000). Dorest is payable annually every December 31. The bonds mature on December 31, 2023. The effective interest rate is 8% considering the Dker's commission. On December 31, 2021, the fair value of bonds is P1,017,610. Question 1 If the bonds are classified as financial assets at fair value through profit or loss (FA at FVTPL), the amount to be recognized as fair value adjustment loss in the entity's 2021 profit or loss is O 33,900 O 18.021 O 13,900

Presented below are two independent situations. For each of the independent situations presented below, prepare the journal entry to record the retirement or conversion of the bonds. (a) Sandra Corporation purchased $780,000 of its bonds on June 30, 2020, of the bonds on the retirement date was $700,000. The bonds pay annual has been made and recorded. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) at 102 and immediately interest and the interest retired them. The carrying value payment due on June 30, 2020,

Answer 2

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 8, Problem 8.9Q

To determine

Bonds of affiliate purchased from non-affiliate: When an affiliate of issuer later acquires bonds from unrelated party, the bonds are retired at the time of purchase. The bonds are not held outside the consolidated entity. Once another company within the consolidated entity purchases them, it must be treated as repurchase by debtor. Acquisition of an affiliate’s bonds by another company with in affiliated entities is referred as constructive retirement. Although bonds are not actually retired.

When constructive retirement occurs, the consolidated income statement reports gain or loss based on difference between carrying value and purchase price paid by affiliate to acquire it. And it is not reported in consolidated balance sheet either as bond payable or as investment because the bonds are no longer outstanding.

To explain : The manner in which gain or loss on constructive retirement is computed using two companies trial balance when affiliate bonds are purchased form nonaffiliated in the beginning of the current year.

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Answer 3

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 8, Problem 8.9Q

To determine

Bonds of affiliate purchased from non-affiliate: When an affiliate of issuer later acquires bonds from unrelated party, the bonds are retired at the time of purchase. The bonds are not held outside the consolidated entity. Once another company within the consolidated entity purchases them, it must be treated as repurchase by debtor. Acquisition of an affiliate’s bonds by another company with in affiliated entities is referred as constructive retirement. Although bonds are not actually retired.

When constructive retirement occurs, the consolidated income statement reports gain or loss based on difference between carrying value and purchase price paid by affiliate to acquire it. And it is not reported in consolidated balance sheet either as bond payable or as investment because the bonds are no longer outstanding.

To explain : The manner in which gain or loss on constructive retirement is computed using two companies trial balance when affiliate bonds are purchased form nonaffiliated in the beginning of the current year.

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Check out a sample textbook solution

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 8, Problem 8.9Q

To determine