xercise 17-5 (Part Level Submission) On January 1, 2013, Phantom Company acquire
ID: 2823397 • Letter: X
Question
xercise 17-5 (Part Level Submission)
On January 1, 2013, Phantom Company acquires $302,500 of Spiderman Products, Inc., 8% bonds at a price of $287,455. The interest is payable each December 31, and the bonds mature December 31, 2015. The investment will provide Phantom Company a 10.00% yield. The bonds are classified as held-to-maturity.
(a)
Schedule of Interest Revenue and Bond Discount Amortization
Straight-line Method
Bond Purchased to Yield
Date
Cash
Received
Interest
Revenue
Bond Discount
Amortization
Carrying Amount
of Bonds
SHOW LIST OF ACCOUNTS
SHOW SOLUTION
SHOW ANSWER
LINK TO TEXT
(b)
Schedule of Interest Revenue and Bond Discount Amortization
Effective-Interest Method
Bond Purchased to Yield
Date
Cash
Received
Interest
Revenue
Bond Discount
Amortization
Carrying Amount
of Bonds
SHOW LIST OF ACCOUNTS
xercise 17-5 (Part Level Submission)
On January 1, 2013, Phantom Company acquires $302,500 of Spiderman Products, Inc., 8% bonds at a price of $287,455. The interest is payable each December 31, and the bonds mature December 31, 2015. The investment will provide Phantom Company a 10.00% yield. The bonds are classified as held-to-maturity.
Explanation / Answer
Cash
Interest
Bond Discount
Carrying Amount
Date
Received =302500*8%
Revenue = CARRYING AMOUNT*10%
Amortization = INTEREST REVENUE-CASH RECEIVED
of Bonds = CARRYING VALUE+ discount amortized
1/1/2013
287455
12/31/2013
24200
28745.5
4545.5
292000.5
12/31/2014
24200
29200.05
5000
297000.6
12/31/2015
24200
29700
5500
302500.6
Cash
Interest
Bond Discount
Carrying Amount
Date
Received =302500*8%
Revenue = CARRYING AMOUNT*10%
Amortization = INTEREST REVENUE-CASH RECEIVED
of Bonds = CARRYING VALUE+ discount amortized
1/1/2013
287455
12/31/2013
24200
28745.5
4545.5
292000.5
12/31/2014
24200
29200.05
5000
297000.6
12/31/2015
24200
29700
5500
302500.6
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