1) X Ltd issued a loan on 1st January 2015 and classified it as measured at amortised cost. Terms Norminal : GHS 50million Coupon rate : 10% Terms to maturity: 3 years Purchase price: FHS 48million Effective rate : 11.67% Required: Show the double entry for each year to maturity (ignore loss allowance) 2) A company issues GHS 10million of 6% bonds are a price of 100.50 for each GHS 100 norminal value with the issue cost of 50,000. The bonds are redeemable after four years for 10,444,000. The effective annual interest for this financial instrument is 7% Required Calculate the amortised cost of the bond and show the interest for each year to maturity

1) X Ltd issued a loan on 1st January 2015 and classified it as measured at amortised cost. Terms Norminal : GHS 50million Coupon rate : 10% Terms to maturity: 3 years Purchase price: FHS 48million Effective rate : 11.67% Required: Show the double entry for each year to maturity (ignore loss allowance) 2) A company issues GHS 10million of 6% bonds are a price of 100.50 for each GHS 100 norminal value with the issue cost of 50,000. The bonds are redeemable after four years for 10,444,000. The effective annual interest for this financial instrument is 7% Required Calculate the amortised cost of the bond and show the interest for each year to maturity

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 4EA: On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated...

See similar textbooks

Similar questions

A Ltd issued a 5% loan note on 1 April 2012 at its face value of K25 million. Direct costs of the issue were K1,500,000. the loan note will be redeemed on 31 March 2015 at a substantial premium. The effective interest rate applicable is 10% per annum. Explain the accounting treatment of the above instrument
X Ltd issued a loan on 1 January 2015 and classified it as measured at amortised cost. Terms: Nominal value GHS50 million Coupon rate 10% Term to maturity 3 years Purchase price GHS48 million Effective rate 11.67% Required: Show the double entry for each year to maturity of the bond. (Ignore loss allowances)
On 1 January 2017, a company which prepares financial statement to 30 June each year buys € 400,000 of 5% loan notes for € 411,225. Interest will be received half-yearly on 30 June and 31 December and the loan notes will be repaid at a premium of 10% on 31 December 2020. The effective rate of interest is 3.5% per half year and the company intends to hold this investment until maturity. Calculate the amount of interest income that should be recognised in the company's financial statements for each of the years to 30 June 2017, 2018, 2019. Also calculate the amount at which the loan notes should be shown in the statement
Accounting Goodview Berhad issued RM 20 million 6% convertible loan notes on 1 January 2017. Upon maturity on 31 December 2019, the holders of the loan notes have the option to accept cash or convert the notes into ordinary shares at the term of RM 100 loan notes can be converted into 50 ordinary shares. The market interest rate for the year 2017 was 10%. Required: In accordance with MERS 9: Financial Instruments: a) Determine the loan amount over its maturity period. b) Determine the relevant journal entries in the book of the company over the maturity period of the loan notes.
A Collateralized Mortgage Obligation (CMO) principal balance is $1,000,000,000. The pass thru rate is 5.35%. The Weighted Average Coupon rate is 6.35%. The weighted Average Months is 350. The PSA is 90. 3-What is the month 1 CMO total cash flow from pass thru interest, scheduled principal and prepaid principal? 1-What is the total prepaid principal in month 30 of the Weighted Average Loan Age? 2- Within how many months from the creation of the CMÓ will tranche C principal be totally paid?
On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
Iniki Bhd issues five year bonds with the following terms: Face value (RM 1,000 each) RM 10,000 Stated interest rate 8% Annual interest payment date January 1 Date of bonds January 1, 2018 Date of maturity December 31, 2022 The company's required rate of return is 6%. Required:- (i) Calculate the selling price of the bonds, rounded to the nearest Ringgit Malaysia. (ii) Prepare the journal entries to record the bond issuance. (iii)Prepare the amortization schedule, assuming the amortization is recorded on interest payment dates.
On 1 January 2010, Elegant Fragrances Company issues £1,000,000 face value, fi ve-yearbonds with annual interest payments of £55,000 to be paid each 31 December. Th e market interest rate is 6.0 percent. Using the eff ective interest rate method of amortisation,Elegant Fragrances is most likely to record:A . an interest expense of £55,000 on its 2010 income statement.B . a liability of £982,674 on the 31 December 2010 balance sheet.C . a £58,736 cash outfl ow from operating activity on the 2010 statement of cashfl ows.
2. DEF Company will issue $8,000,000 in 10%, 10-year bonds when the market rate of interest is 7%. Interest is paid semiannually. Required: a. Will this interest structure result in a Premium for DEF company or a Discount? b. How much cash will be received from the issuance of the bond? c. How much will the semi-annual interest payment be on the bond?
A Collateralized Mortgage Obligation (CMO) principal balance is $1,000,000,000. The pass-thru rate is 5.35%. The Weighted Average Coupon rate is 6.35%. The weighted Average Months is 350. The PSA is 90. The CMO (at the time the CMO is first created) is divided into 4 tranches (A, B,C, D), each with a par value of $250,000,000 and a 5.35% coupon rate. Within how many months from the creation of the CMO will tranche C principal be totally paid? 30 55 207 350
A Collateralized Mortgage Obligation (CMO) principal balance is $1,000,000,000. The pass thru rate is 5.35%. The Weighted Average Coupon rate is 6.35%. The weighted Average Months is 350. The PSA is 90. The CMO (at the time the CMO is first created) is divided into 4 tranches (A,B,C,D), each with a par value of $250,000,000 and 5.35% coupon rate. Within how many months from the creation of the CMO will tranche C principal be totally paid?
Mawuena Ltd issued 1500 convertible loan note at par on 1st January 2015. The loan notes are redeemable in four years’ time at their par value of GH¢ 200 per note. The loan note pays interest annually in arrears at an interest rate of 8%. Each loan note can be converted at the maturity date into 10 GH¢ 1 shares. The effective interest rate for four year loan notes with no right of conversion is 12% and the risk-free annual interest rate for a four-year term is 7%. Required Show how the loan note should be treated in the financial statement of Mawuena Ltd in accordance with IFRS 9 Financial Instrument