Business, 16.09.2021 23:20 juliagearhart9p229te

Klausenheimer Inc. just issued a $80 million bond. The bond has a coupon rate of 5% and a maturity of three years. The coupon is payable at the end of each year. The effective interest rate at the beginning of year 1 was 8%, beginning of year 2 was 5%, and beginning of year 3 was 2%. Make sure to show your calculations where applicable. a. Determine Klausenheimers proceeds from the bond issue.
b. If Klausenheimer decided to use the amortized cost method to account for the bonds, then what would be the interest and bond amortization for each of the three years. (similar to Exhibit 3.1 in the textbook)
c. If Klausenheimer decided to use the fair value method to account for the bonds, then what would be the interest, unrealized gain/loss, and total expense for each of the three years. (similar to Exhibit 3.1 in the textbook)
d. Explain why there is a difference between the amounts charged to income every year under the two methods.

Answers: 3

Show answers

Another question on Business

Business, 22.06.2019 16:20

Stosch company's balance sheet reported assets of $112,000, liabilities of $29,000 and common stock of $26,000 as of december 31, year 1. if retained earnings on the balance sheet as of december 31, year 2, amount to $74,000 and stosch paid a $28,000 dividend during year 2, then the amount of net income for year 2 was which of the following? a)$23,000 b) $35,000 c) $12,000 d)$42,000

Answers: 1

Answer

Business, 22.06.2019 23:00

Sailcloth & more currently produces boat sails and is considering expanding its operations to include awnings for homes and travel trailers. the company owns land beside its current manufacturing facility that could be used for the expansion. the company bought this land 5 years ago at a cost of $319,000. at the time of purchase, the company paid $24,000 to level out the land so it would be suitable for future use. today, the land is valued at $295,000. the company has some unused equipment that it currently owns valued at $38,000. this equipment could be used for producing awnings if $12,000 is spent for equipment modifications. other equipment costing $490,000 will also be required. what is the amount of the initial cash flow for this expansion project?

Answers: 2

Answer

Business, 23.06.2019 10:10

Hannah is concerned about the increase in the cases of obesity in her state. she has convinced her company to create advertisements to generate awareness about obesity. which kind of advertising will the company use to achieve this?

Answers: 3

Answer

Business, 23.06.2019 13:30

Which tasks do travel agents and hotel concierges have in common? they both recommend where to eat and handle personal services for tourists. they both process payments and book travel packages for tourists. they both make reservations and provide information for tourists. they both recommend unusual spots to visit and book tour guides for tourists

Answers: 2

Answer

You know the right answer?

Klausenheimer Inc. just issued a $80 million bond. The bond has a coupon rate of 5% and a maturity o...

Questions