Ch14 - CPA Exam Questions Chapter 14 1 c At issuance a bond is valued at the present value of the principal and interest payments discounted at the

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CPA Exam Questions Chapter 14 1. c. At issuance, a bond is valued at the present value of the principal and interest payments, discounted at the prevailing market rate of interest at the date of issuance of the bond. Per APB #21, "Interest on Receivables and Payables." 2. b. Carrying value of bonds at 6/30/09 is $4,980,000 ($5,000,000 + $30,000 - $50,000). 3. d. Six months interest revenue at stated rate. Since no yield rate was given, the $1,800 amortization must be accepted. Note that the amortization is added to the stated revenue amount since the bonds were acquired at a discount. 4. b. Present value of payments:.
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5. a. A bond issued at a discount reflects that the market rate is greater than the contract rate.
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CPA Exam Questions (concluded) 6. a. The interest payable at September 30, 2009, will be for the three month's interest that has accrued since the last interest was paid on June 30, 2009 ($300,000 × 12% × 3/12 = $9,000). 7.
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This note was uploaded on 02/20/2009 for the course ACTG 344 taught by Professor Baril,c during the Spring '08 term at James Madison University.

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Ch14 - CPA Exam Questions Chapter 14 1 c At issuance a bond is valued at the present value of the principal and interest payments discounted at the

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