Homeworksolution-ch.9

Homeworksolution-ch. - EXERCISE 9-1(10-15 minutes 1 Trading security 2 Available-for-sale security When the company acquires 20 or more the

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EXERCISE 9-1 (10-15 minutes) 1. Trading security 2. Available-for-sale security. When the company acquires 20% or more, the investment will be reclassified as an equity investment if significant influence over Farm Corp. exists. 3. Available-for-sale security 4. Available-for-sale security 5. Held-to-maturity security
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EXERCISE 9-4 (15-20 minutes) (a) Schedule of Interest Income and Bond Discount Amortization Effective Interest Method 9% Bond Purchased to Yield 12% Date Cash Received Interest Income Bond Discount Amortization Carrying Amount of Bonds 01/01/08 12/31/08 12/31/09 12/31/10 $18,000 18,000 18,000 $22,270.68* 22,783.16 23,357.16 $4,270.68 4,783.16 5,357.16** $185,589.00 189,859.68 194,642.84 200,000.00 * *$185,589 X .12 = $22,270.68 **Rounded by $.02. (b) December 31, 2009 Cash. ........................................................ 18,000.00 Investment in Spiderman Bonds (HTM) 4,783.16 Interest Income. .............................. 22,783.16 (c) December 31, 2010 Cash. ........................................................ 18,000.00 Investment in Spiderman Bonds (HTM) 5,357.16 Interest Income. .............................. 23,357.16 Cash. ........................................................ 200,000.00 Investment in Spiderman Bonds (HTM) 200,000.00 Alternatively, the entries could be combined in one compound entry: Cash. ........................................................ 218,000.00 Interest Income. .............................. 23,357.16 Investment in Spiderman Bonds (HTM) 194,642.84
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This note was uploaded on 10/18/2010 for the course BUS ACC415 taught by Professor Bibijohn during the Spring '09 term at Seneca.

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Homeworksolution-ch. - EXERCISE 9-1(10-15 minutes 1 Trading security 2 Available-for-sale security When the company acquires 20 or more the

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