On August 1, 2020, Franklin Inc. acquired $ 120,000 (face value) 10% bonds of Machu Corporation at 102 plus accrued interest. The bonds were dated May 1, 2020, and mature on April 30, 2023, with interest payable each October 31 and April 30. The bonds will be held to maturity. Assuming the amortized cost model is used, the entry to record the purchase of the bonds on August 1, 2020 is a) Bond Investment at Amortized Cost................................125,400
Cash ................................................................125,400
b)Bond Investment at Amortized Cost........................122,400
Interest Income...............................3,000
Cash.....................................................125,400
c) Bond Investment at Amortized Cost........................125,400
Interest Income...............................3,000
Cash.....................................................122,400
d) Bond Investment at Amortized Cost.................. 120,000
Premium on Bonds................................................5,400
Cash............................................................................125,400
Correct Answer:
Verified
Q1: Equity investments that are accounted for under
Q3: Which of the following is NOT an
Q4: Generally, transaction costs are
A) capitalized when investments
Q5: Which of the following is NOT a
Q6: To calculate the amount of interest to
Q7: Any contract that is evidence of a
Q8: On August 1, 2020, Peterson Corp. acquired
Q9: In practice, under the cost/amortized cost method
Q10: How investments are accounted for does NOT
Q11: Under ASPE, for accounting for investments in
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents