Debt investment : Debt investments refer to the investments made in debt instrument by the investor at a predetermined interest and maturity period. Examples of debt investments are corporate bonds, government bonds, certificate of deposits. Gain on sale of debt investments: If the sale proceeds from sale of debt investments exceed the cost price of the debt investments, then there is a gain on sale of investments. Loss on sale of debt investments: If the sale proceeds from sale of debt investments is lesser than the cost price of the debt investments, then there is a loss on sale of investments. To explain: the computation of gain or loss on sale of debt investments.

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Answer 1

Question

Chapter AE, Problem 3Q

(a)

To determine

Debt investment: Debt investments refer to the investments made in debt instrument by the investor at a predetermined interest and maturity period. Examples of debt investments are corporate bonds, government bonds, certificate of deposits.

Gain on sale of debt investments: If the sale proceeds from sale of debt investments exceed the cost price of the debt investments, then there is a gain on sale of investments.

Loss on sale of debt investments: If the sale proceeds from sale of debt investments is lesser than the cost price of the debt investments, then there is a loss on sale of investments.

To explain: the computation of gain or loss on sale of debt investments.

(b)

To determine

To explain: The presentation of gain or (loss) on the sale of debts investments in the financial statements.

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The industrial enterprise "HUANG S.A." purchased a sorting and packaging machine from a foreign company on 1/4/2017 at a cost of €500,000. The useful life of the machine was estimated by the Management at ten (10) years, while the residual value was estimated at zero. For the transportation of the machine from abroad to the company's factory, the amount of €20,000 was paid on 15/4/2017. As the insurance coverage of the machine during transportation was the responsibility of the selling company, HUANG S.A. proceeded to insure the machine from 16/4/2017 to 15/4/2018, paying the amount of €1,200. The delivery took place on 15/4/2017. As adequate ventilation of the multifunction device is essential for its proper operation, the company fitted an air duct on the multifunction device. The cost of the air duct amounted to €2,000 and was paid on 20/4/2017. On 25/4/2017, an external electrician was paid €5,000 for the electrical connection of the device. The company also paid €5,000 to an…

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Answer 2

Question

Chapter AE, Problem 3Q

(a)

To determine

Debt investment: Debt investments refer to the investments made in debt instrument by the investor at a predetermined interest and maturity period. Examples of debt investments are corporate bonds, government bonds, certificate of deposits.

Gain on sale of debt investments: If the sale proceeds from sale of debt investments exceed the cost price of the debt investments, then there is a gain on sale of investments.

Loss on sale of debt investments: If the sale proceeds from sale of debt investments is lesser than the cost price of the debt investments, then there is a loss on sale of investments.

To explain: the computation of gain or loss on sale of debt investments.

(b)

To determine

To explain: The presentation of gain or (loss) on the sale of debts investments in the financial statements.

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Answer 3

Question

Chapter AE, Problem 3Q

(a)

To determine

Debt investment: Debt investments refer to the investments made in debt instrument by the investor at a predetermined interest and maturity period. Examples of debt investments are corporate bonds, government bonds, certificate of deposits.

Gain on sale of debt investments: If the sale proceeds from sale of debt investments exceed the cost price of the debt investments, then there is a gain on sale of investments.

Loss on sale of debt investments: If the sale proceeds from sale of debt investments is lesser than the cost price of the debt investments, then there is a loss on sale of investments.

To explain: the computation of gain or loss on sale of debt investments.

(b)

To determine

To explain: The presentation of gain or (loss) on the sale of debts investments in the financial statements.

Expert Solution & Answer

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Answer 4

Question

Chapter AE, Problem 3Q

(a)

To determine

Debt investment: Debt investments refer to the investments made in debt instrument by the investor at a predetermined interest and maturity period. Examples of debt investments are corporate bonds, government bonds, certificate of deposits.

Gain on sale of debt investments: If the sale proceeds from sale of debt investments exceed the cost price of the debt investments, then there is a gain on sale of investments.

Loss on sale of debt investments: If the sale proceeds from sale of debt investments is lesser than the cost price of the debt investments, then there is a loss on sale of investments.

To explain: the computation of gain or loss on sale of debt investments.

(b)

To determine

To explain: The presentation of gain or (loss) on the sale of debts investments in the financial statements.

Expert Solution & Answer

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Answer 5

Chapter AE, Problem 3Q

(a)

To determine

Debt investment: Debt investments refer to the investments made in debt instrument by the investor at a predetermined interest and maturity period. Examples of debt investments are corporate bonds, government bonds, certificate of deposits.

Gain on sale of debt investments: If the sale proceeds from sale of debt investments exceed the cost price of the debt investments, then there is a gain on sale of investments.

Loss on sale of debt investments: If the sale proceeds from sale of debt investments is lesser than the cost price of the debt investments, then there is a loss on sale of investments.

To explain: the computation of gain or loss on sale of debt investments.

(b)

To determine

To explain: The presentation of gain or (loss) on the sale of debts investments in the financial statements.

Answer 6

Chapter AE, Problem 3Q

(a)

To determine

Debt investment: Debt investments refer to the investments made in debt instrument by the investor at a predetermined interest and maturity period. Examples of debt investments are corporate bonds, government bonds, certificate of deposits.

Gain on sale of debt investments: If the sale proceeds from sale of debt investments exceed the cost price of the debt investments, then there is a gain on sale of investments.

Loss on sale of debt investments: If the sale proceeds from sale of debt investments is lesser than the cost price of the debt investments, then there is a loss on sale of investments.

To explain: the computation of gain or loss on sale of debt investments.

Answer 7

Chapter AE, Problem 3Q

(a)

To determine

Debt investment: Debt investments refer to the investments made in debt instrument by the investor at a predetermined interest and maturity period. Examples of debt investments are corporate bonds, government bonds, certificate of deposits.

Gain on sale of debt investments: If the sale proceeds from sale of debt investments exceed the cost price of the debt investments, then there is a gain on sale of investments.

Loss on sale of debt investments: If the sale proceeds from sale of debt investments is lesser than the cost price of the debt investments, then there is a loss on sale of investments.

To explain: the computation of gain or loss on sale of debt investments.

Answer 8

(b)

To determine

To explain: The presentation of gain or (loss) on the sale of debts investments in the financial statements.

Answer 9

(b)

To determine

To explain: The presentation of gain or (loss) on the sale of debts investments in the financial statements.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. AE - Prob. 1Q Ch. AE - Prob. 2Q Ch. AE - 3. Jill Glendo is confused about losses and gains...Ch. AE - Prob. 4Q Ch. AE - What is the cost of an investment in stock?Ch. AE - Prob. 6Q Ch. AE - Prob. 7Q Ch. AE - Prob. 8Q Ch. AE - Prob. 9Q Ch. AE - Distinguish between the cost and equity methods of...

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To explain: The presentation of gain or (loss) on the sale of debts investments in the financial statements.

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