Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Accounting Basics Expert

Coronado Limited issued 10-year, 7% debentures with a face value of $2.18 million on January 1, 2010. The proceeds received were $1.90 million. The discount was amortized on the straight-line basis over the 10-year term. The terms of the debenture stated that the debentures could be redeemed in full at any point before the maturity date, at a price of 105 of the principal. There was no requirement for a sinking fund.

On January 1, 2017, Coronado issued a mortgage at 101 with a principal of $3.3 million secured by land and building. The mortgage had a 25-year amortization period, with interest payable at 8%. Upon issuance of the mortgage, Coronado used the proceeds to redeem the 7% debentures. Coronado prepares financial statements in accordance with ASPE.

Additional Information for ASPE

ASPE-CPA Canada Handbook, Part II, Sections 1510, 1521, and 3856

There is specific guidance on measuring related party transactions.

Subsequent to initial recognition, liabilities are generally measured at amortized cost using the effective interest or other method (unless measured at fair value under the fair value option or because it is a derivative).

Where the fair value option is used, credit risk is incorporated into the measurement and resulting gains/losses are booked through net income.

Normally the balance sheet is segregated into current/non-current; however, this may not be appropriate for certain industries.

Refinanced long-term debt may be classified as long-term where refinanced by date of issue of financial statements.

1. Prepare the journal entry to record the issuance of the 8% mortgage January 1, 2017.
2. Prepare the journal entry to record the retirement of the 7% debentures on January 1, 2017.
3. Indicate the income statement treatment of the gain or loss on redemption of debentures. Assume that 2017 income before taxes and before any gain or loss on redemption of debentures is $1.90 million, the income tax rate is 19%, and the weighted average number of common shares outstanding is 1.30 million.
4. Calculate earnings per share.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M92569860
  • Price:- $10

Priced at Now at $10, Verified Solution

Have any Question?


Related Questions in Accounting Basics

Question - revenue recognitionmidwest health club mhc

Question - Revenue Recognition Midwest Health Club (MHC) offers 1-year memberships. Membership fees are due in full at the beginning of the individual membership period. As an incentive to new customers, MHC advertised t ...

Assignment -company name - hewlett packard1 what does your

Assignment - Company name - Hewlett Packard. 1. What does your company produce? 2. Analyze the trends in sales, cost of goods sold, gross profit, and operating income for your manufacturing company. Prepare a trend analy ...

Question - kramer corp reported the following sale and

Question - Kramer Corp. reported the following sale and purchase transactions related to a specific product in January 2017: Date Transaction Quantity Unit Cost Unit Sales Price Jan 01 Beginning inventory 5 $90 Jan 03 Sa ...

Question - x company makes two products a and b and uses an

Question - X Company makes two products, A and B, and uses an activity-based costing overhead allocation system, with three cost pools and three cost drivers. Budgeted costs and driver information for 2017 were as follow ...

Corporate accounting assignment -assessment task - select

Corporate Accounting Assignment - Assessment task - Select two public limited companies listed on the Australian Securities Exchange (ASX) that are in the same industry. Go to the website of your selected companies. Then ...

Question - domingo entity entered into a contract to

Question - Domingo Entity entered into a contract to exchange a liability. However, this particular liability does not have a quoted price in Domingo's principle market. Sabado Entity holds an asset similar to the liabil ...

Question - lucky treasures enterprises issued 9 8-year

Question - Lucky Treasures Enterprises issued 9%, 8-year, $2,000,000 par value bonds that pay interest semiannually on October 1 and April 1. The bonds are dated April 1, 2013 and are issued on that date. The discount ra ...

Question - f l wright architects incorporated as licensed

Question - F. L. Wright Architects incorporated as licensed architects on September 1, 2018. During the first month of the operation of the business, these events and transactions occurred: Sept. 1 Stockholders invested ...

Question - during 2018 liangs book store paid 485000 for

Question - During 2018, Liang's Book Store paid $485,000 for land and built a store in Cleveland, Ohio. Prior to construction, the city of Cleveland charged Liang's $1,700 for a building permit, which Liang's paid. Liang ...

Question there are six steps in calculating the current and

Question: There are six steps in calculating the current and deferred income tax expense or benefit components of a company's income tax provision. Identify one of the six steps and describe the step in detail, explainin ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As