How this liability is shown in the Balance sheet at the end of first year (31st March, 2016)?
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On April 1, 2015, Alpha Ltd. raised Rs. 100 million through zero-coupon bond with a maturity period of 3 years. The maturity value of the bond is Rs. 140.50 million and no interest is paid during the three-year period. The effective interest rate is 12% per year compounded annually. How this liability is shown in the Balance sheet at the end of first year (31st March, 2016)?
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- On 2 January 2016, ME Ltd (ME) issued $10,000,000 5-year bonds for $10,811,090. The stated coupon rate is 10% per annum, and the effective interest rate is 8% per annum. Interest is to be paid semi-annually on 30 June and 31 December. The company uses the effective interest rate method of amortizing bond discounts/premiums. As of its most recent financial year ended 31 December 2017, ME expects its net income before interest and tax to be constant over the next three financial years and does not foresee any further interest-bearing borrowings in the near future. (iv) Assume ME’s Times Interest Earned (TIE) ratio for the financial year ended 31 December 2017 is 5. What will its TIE ratio likely be for the next three years? Explain.On April 1, 2015, Alpha Ltd. raised Rs. 100 million through zero-coupon bond with a maturity period of 3 years. The maturity value of the bond is Rs. 140.50 million and no interest is paid during the three-year period. The effective interest rate is 12% per year compounded annually. How this liability is shown in the Balance sheet at the end of first year (31st March, 2016)? Rs. 100 million as non-current liabilities (zero coupon bond) and Rs. 12 million as current liabilities (Interest Payable) Rs. 100 million as non-current liabilities (zero coupon bond) and Rs. 12 million as non-current liabilities (Interest Payable) Rs. 140.5 million as non-current liabilities (zero coupon bond) Rs. 100 million as non-current liabilities (zero coupon bond) and Rs. 13.50 million as non-current liabilities (Interest Payable)On 2 January 2016, ME Ltd (ME) issued $10,000,000 5-year bonds for $10,811,090. The stated coupon rate is 10% per annum, and the effective interest rate is 8% per annum. Interest is to be paid semi-annually on 30 June and 31 December. The company uses the effective interest rate method of amortizing bond discounts/premiums. As of its most recent financial year ended 31 December 2017, ME expects its net income before interest and tax to be constant over the next three financial years and does not foresee any further interest-bearing borrowings in the near future. (v) Because of a substantial increase in the market rate of interest, ME purchased all the bonds on the open market at par on 30 June 2018. Prepare the journal entry to record the retirement of the bonds on 30 June 2018. Ignore the journal entry for the interest payment on 30 June 2018.
- On 1 July 2022 Bombo Ltd issues $2 million in six-year bonds that pay interest every six months at a coupon rate of 8 per cent. At the time of issuing the securities, the market requires a rate of return of 6 per cent. Interest expense is determined using the effective-interest method. (PV tables are available at the end of this exam). Required Determine the issue price. Provide the journal entries at the dates below by showing relevant calculations in a table form. (i) 1 July 2022On 1 July 2023 Tamasek Ltd issues convertible notes with a face value of $10 million. The convertible notes have a 20-year term and mature on 30 June 2043. Interest is payable semi-annually in arrears, i.e. on 31 December and 30 June each year, and the coupon rate of interest is 7.5% p.a., At around the same point in time, companies with a similar credit rating issue debt securities without a conversion option with a coupon rate of 10% p.a., payable semi-annually. Required: Determine the debt and equity components of the convertible notes issued using the residual valuation method. Prepare the entries of Tamasek Ltd to account for the convertible notes over the period 1 July 2023 to 30 June 2025.Tuku limited issued a 5% K70 million bond on 1/1/2018. The bond attract an issue costs of 10% as well as discount of 2%. The effective interest rate is 8%. Required to explain and show how the above instrument will be accounted for the years 2018 to 2020. The company has a year that ends in December
- |(c) Azra Bhd issued 5% bond of nominal value RM5,000,000 at a discount of 10% on 1 January 2020. The transaction costs amounted to RM100,000. The effective interest rate at 8% per annum. The company closes its accounts on 31 December annually. You are required to prepare the relevant journal entries for initial and subsequent measurements in the year 2020 (without narrations).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)Carla Vista Inc. issued $920,000 of 10 - year, 3% bonds on January 1, 2024. Interest is to be paid semi-annually. The market interest rate was 4%. What is the face value of the bond? When will this be paid?
- On 1 July 2019, an investor buys a corporate bond issued by Jeanius plc, which is repayable at par on 1 July 2039 and has an annual coupon rate of 3% payable twice yearly in arrears. (a) Assuming that the gross redemption yield on the bond is 6.0% per annum calculate the purchase price per £100 nominal. (b) Jeanius plc experiences financial problems leading to a falling bond price. On 1st of September 2022 the gross redemption yield on the bond is 11% per annum. On the same day, a bank makes an offer to buy the company if bond holders accept an immediate payment of £48 per £100 nominal. Calculate the price of the bond on 1st of September 2022 and explain whether or not the investor should accept this offer.On January 1, 2021, GLITTER Company issued 10% bonds dated January 1, 2021 with a face amount of ₱8,000,000. The bonds mature on December 31, 2026. For bonds of similar risk and maturity, the market yield is 14%. Interest is paid semi-annually on June 30 and December 31. (Use at most, 4 decimalplaces for PV factors) REQUIREMENTS: a. How much is the interest expense for the year ended, December 31, 2021?b. How much is the interest expense for the year ended, December 31, 2022? c. What is the carrying amount of the bonds on December 31, 2022?On February 1, 2021, Malawi ltd, issued a 5% , 8-year bond with a face value of 500,000. The semi-annual interest (Coupon) Payments are made on January 31 and July 31. Nikawi LTD receives $407, 606 in cash. The company uses the effective interest method. The market rate is 6% Prepare a bond amortization table for the first two semi-annual interest periods. Record the journal entries for the insurance of the bond on February 1st, 2021 and the semi annual interest payments for July 31st, 2021, and January 31st 2022 Add on questions What is the interest payment on July 31st, 2021 What is the interest expense on July 31st, 2021 What is the carrying amount of the bond July 31st, 2021 What is the interest payment on January 31st, 2022 What is the interest expense on January 31st, 2022 What is the carrying amount of the bond on January 31st, 2022.