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 - susan a single taxpayer owns and operates a

Question - Susan, a single taxpayer, owns and operates a bakery as a sole proprietorship. The business is not a specified services business. In 2018, the business pays $100,000 in W-2 wages, holds $150,000 of qualified p ...

Question - hardcastle ltd had sales of 3 000 000 and net

Question - Hardcastle Ltd. had sales of $3 000 000 and net operating income of $900 000. Operating assets during the year averaged $1 500 000. The manager of Hardcastle is considering the purchase of a new machine which ...

Question - on february 20 2017 coronado inc purchased a

Question - On February 20, 2017, Coronado Inc. purchased a machine for $1,440,000 for the purpose of leasing it. The machine is expected to have a 10-year life, no residual value, and will be depreciated on the straight- ...

Question - the following are reported amounts from ellis

Question - The following are reported amounts from Ellis Company's multiple-step income statement: Cost of merchandise sold $199,840 Merchandise inventory 139,890 Sales 307,750 Sales discounts 5,850 Sales returns 11,690 ...

Question - ajax inc issued callable bonds with a par value

Question - Ajax, Inc., issued callable bonds with a par value of $1,000,000 that require the payment of a call premium of $10,000. The bonds have a carrying value of $990,000. We call these bonds prior to maturity on Sep ...

Question - shanklin corporations unadjusted trial balance

Question - Shanklin Corporations unadjusted trial balance as of June 30, 2018 is as shown below: DEBIT Cash 13000, AR 1500, Prepaid Insurance 600, Supplies 3800, Equipment 30000, Dividends 4800, Wages Expense 14000..... ...

Question - maple mount fishery is a canning company in

Question - Maple Mount Fishery is a canning company in Astoria. The company uses a normal costing system in which factory overhead is applied on the basis of direct labor costs. Budgeted factory overhead for the year was ...

Question - fundamentals of revenue recognition - respond to

Question - Fundamentals of Revenue Recognition - Respond to the questions related to the following statements. 1. A wholly unperformed contract is one in which the company has neither transferred the promised goods or se ...

Question assignmen t descriptionclassroom discussion

Question: Assignmen t Description Classroom discussion requires the active participation of students and the instructor to create robust interaction and dialogue. Every student is expected to engage in dialogue by partic ...

Question - kelly hayes operates a bed and breakfast hotel

Question - Kelly Hayes operates a bed and breakfast hotel in a beach resort area of Noosa. Depreciation on the hotel is $60,000 per year. Kelly employs a maintenance person at an annual salary of $30,000 per year and a c ...

  • 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