1.
Current Liabilities
A current liability is an obligation to pay off within a year. This means it has a maturity period of less than a year. It may or may not have interest attached to it. The source of current liabilities is mostly vendors.
To know: Whether the H bonus depends on the classification of the debt securities or not.
2.
Current Liabilities
A current liability is an obligation to pay off within a year. This means it has a maturity period of less than a year. It may or may not have interest attached to it. The source of current liabilities is mostly vendors.
To find:
Criteria for H to classify the securities.
3.
Current Liabilities
A current liability is an obligation to pay off within a year. This means it has a maturity period of less than a year. It may or may not have interest attached to it. The source of current liabilities is mostly vendors.
To find:
Whether any company oversight of H classification of securities.
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FINANCIAL ACCT.FUND.(LOOSELEAF)
- Energetic Engines is trying to estimate its cost bonds that pay $20 interest every six months. Each bond, which has a $1,000 face value and matures in six years, is currently selling for $900. Estimate Energetic’s cost of retained earnings using the bond-plus-risk-premium approach.arrow_forwardVictoria Company has investments in marketable securities classified as trading and available-for-sale. At the beginning of the year, the aggregate market value of each portfolio exceeded its amortized cost. During the year, Victoria sold some securities from each portfolio. At the end of the year, the aggregate amortized cost of each portfolio exceeded its market value. Victoria also has investments in bonds classified as held-to-maturity, all of which were purchased for face value. During the year, some of these bonds held by Victoria were called prior to their maturity by the bond issuer. Three months before the end of the year, additional similar bonds were purchased for face value plus 2 months accrued interest. Required: 1. Explain how Victoria accounts for: a. sale of securities from each portfolio b. each equity securities portfolio at year-end 2. Explain how Victoria accounts for the disposition prior to their maturity of the long-term bonds called by their issuer. 3. Explain how Victoria reports the purchase of the additional similar bonds at the date of the acquisition.arrow_forwardYour investment department has researched possible investments in corporate debt securities. Among the available investments are the following $100 the last few weeks. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) million bond issues, each dated January 1, 2018. Prices were determined by underwriters at different times during Company Bond Price Stated Rate 1-BB Corp. $107 million 15% 2.DD Corp. $100 million 14% 3. GG Corp. $ 93 million 13% Each of the bond issues matures on December 31, 2037, and pays interest semiannually on June 30 and December 31. For bonds of similar risk and maturity, the market yield at January 1, 2018, is 14%. Required: Other things being equal, which of the bond issues offers the most attractive investment opportunity if it can be purchased at the prices stated? The least attractive? Most attractive investment Least attractive investmentarrow_forward
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- The Virginia Corporation recently issued 10-year bonds at a price of $1,000. These bonds pay $60 in interest each six months. Their price has remained stable since they were issued. i.e. they still sell for $1,000. Due to additional financing needs, the firm wishes to issue new bonds that would have a maturity of 10 years, a par value of $1,000 and pay $40 in interest every six months. If both bonds have the same yield, how many new bonds must the company issue to raise $2,000,000 cash?arrow_forwardplease help me solve this and explain the steps. i am not sure why my answer is incorrectarrow_forwardPlease answer all questions and show all calculations. Thank you.arrow_forward
- please help me with this question and explain in stepsarrow_forwardSilvia is thinking about investing money into a bond to diversify her investments. Company X issued 12 bonds at a face value of $43500 and a 17.5% nominal interest rate paid semiannually to raise capital for an upcoming factory expansion. The face value of the bond is $43500. The bond is a 10 year bond. As the bond was issued, the current nominal interest rate in the market is 7.0% compounded monthly. What is the maximum price Silvia should be pay for a single bond from company X?arrow_forwardCan I get help with the following please... The 20-year Treasury rate is 4.05 percent, and a firm’s credit rating is BB. Suppose management of the firm decides to raise $20 million by selling 20-year bonds. Management determines that since it has plenty of experience, it will not need to hire an investment banker. At present, 20-year BB bonds are selling for 145 basis points above the 20-year Treasury rate, and it is forecast that interest rates will not stay this low for long.What is the cost of borrowing? Borrowing cost rate % What role does timing play in this situation? Time is of (essence or no essence) in this case.arrow_forward
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