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kidwe2010
27.04.2020 •
Mathematics
On January 1, 2017, Shay issues $700,000 of 10%, 15-year bonds at a price of 97¾. Six years later, on January 1, 2023, Shay retires 20% of these bonds by buying them on the open market at 104½. All interest is accounted for and paid through December 31, 2022, the day before the purchase. The straight-line method is used to amortize any bond discount. What is the amount of the recorded gain or loss from retiring the bonds?
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Ответ:
Loss on retirement is $8190
Step-by-step explanation:
In order to determine the gain or loss on the retirement of the 20% of the bonds,one needs to know the book value of the bonds retired.
First,we calculate the book value of the entire bond as follows
Initial carrying value=$700,000*97.75%=$ 684,250.00
Initial discount on bonds issue=face value -issue price
=$700,000-$684,250
=$15750
Discount amortized over 6 years out of 15 years=15750 *6/15=$6300
Unamortized discount==$15,750 -$6300=$9450
The book value of the bond now=face value-unamortized discount
=$700,000-$9450 =$690,550
book value of 20% bonds=$690550 *20%=$138,110
cash paid for retirement=$700,000*20%*104.5%=$146,300
loss on retirement=$146,300-$138,100=$8190
Ответ:
answer:
step-by-step explanation:
1) x=38
2) x=1.312462
3) x=38
hope this