The price of a corpoprice bond is the current value of its confront amount at the sector or efficient price of interest:a. Plus the current value of all future interest payments at the sector or efficient price of interemainder.b. Plus the current worth of all future interemainder payments at the declared rate of interest.c. Reduced by the present worth of all future interemainder payments at the sector or effective rate of interemainder.d. Reduced by the current value of all future interest payments at the declared price of interest.

You are watching: The market value of a bond is equal to quizlet


a. Plus the present value of all future interemainder payments at the sector or efficient price of interemainder.The price of a bond is equal to the current worth of all future cash outflows, principal and also interemainder, using the sector or effective rate.

When a bond concern sells for less than its challenge worth, the sector rate of interest is:a. Dependent on the proclaimed rate of interemainder.b. Equal to the stated price of interemainder.c. Higher than the declared rate of interemainder.d. Less than the declared rate of interest.
c. Higher than the declared rate of interest.Higher than the proclaimed rate of interemainder. The discount developed will certainly be amortized to generate extra interemainder expense (well-known over the life of the bond). This is included to the interemainder cost created by the routine interemainder payments (computed at the declared price of interest) to rise the full interemainder cost to that of the market rate of interemainder.

On June 30, 2018, Mabry Corporation issued $5 million of its 8% bonds for $4.6 million. The bonds were priced to yield 10%. The bonds are dated June 30, 2018. Interest is payable semieach year on December 31 and also July 1. If the reliable interest strategy is provided, by just how a lot have to the bond discount be decreased for the 6 months finished December 31, 2018?a. $16,000b. $20,000c. $23,000d. $30,000
d. $30,000Under the effective interest method, the interemainder expense is computed as the start book value of the debt times the yield interemainder rate. The distinction between the interemainder cost and also the interest payment represents the amortization of the discount. Here, the interest price is $230,000 ($4,600,000 x .10 x 6/12) and also the interemainder payment is $200,000 ($5,000,000 x .08 x 6/12).

A discount on bonds need to be reported in the balance sheet:a. At the current worth of the future enhancement to bond interemainder expense due to the discount.b. As a reduction in bond problem expenses.c. As a reduction of the challenge amount of the bond.d. As a deferred crmodify.
c. As a reduction of the confront amount of the bond.A discount on bonds is a contra liability account
and therefore deducted from the face amount when presented on the balance sheet.
If bonds are issued in between interest days the entry to document the issuance of the bonds will:a. Include a credit to accrued interemainder payable.b. Include a debit to interest cost.c. Include a debit to cash that has been decreased by accrued interemainder from the last interest date.d. Be uninfluenced by the timing of sale.
a. Include a crmodify to accrued interest payable.When bonds are issued in between interest payment days, the cash obtained is made up of 2 components: the price of the bond and also the interest accrued, but unphelp, given that the last interest payment day.
The crmodify relating to the accrued interemainder percentage is interest payable.
On January 1, 2018, Blair Company type of offered $800,000 of 10% ten-year bonds. Interemainder is payable semiannually on June 30 and also December 31. The bonds were sold for $708,000, priced to yield 12%. Blair records interest at the reliable rate. Blair have to report bond interest price for the 6 months ended June 30, 2018 in the amount of:a. $35,400b. $40,000c. $42,480d. $48,000
c. $42,480Under the effective interest strategy, the interest expense is computed as the start book value of the debt times the yield interest rate. ($708,000 × .12 × 6/12).

In a bond amortization table for bonds issued at a discount:a. The effective interest expense is less via each succeeding interest payment.b. The complete efficient interemainder over the term to maturity is equal to the amount of the discount plus the complete cash interemainder paid.c. The superior balance (book value) of the bonds declines ultimately to face worth.d. The reduction in the discount is less via each succeeding interemainder payment.
b. The total effective interest over the term to maturity is equal to the amount of the discount plus the full cash interest paid.Total interemainder expense for bonds issued at a discount is equal to the full interemainder payments over the life of the bonds plus the initial discount as soon as the bonds are marketed.

Bonds will certainly sell at:a. Their face value if the stated price is equal to the nominal price.b. Their challenge value unless the proclaimed price is less than the sector rate.c. A discount if the proclaimed price exceeds the market price.d. A premium if the proclaimed price exceeds the market price.
d. A premium if the declared rate exceeds the market price.A premium if the declared price exceeds the market rate. If the stated price exceeds the sector rate, investors will certainly bid up the price of the bonds (producing a premium) till the effective price on the bond equals the sector rate.

When bonds are issued at a discount and interest expense is taped at the effective interest rate, interemainder cost in the previously years of the term to maturity will certainly be:a. Less than the cash interest payments made.b. Less than if the straight-line approach were used.c. Greater that if the straight-line approach were offered.d. The exact same as if the straight-line approach were used.
b. Less than if the straight-line technique were offered.Under the reliable interemainder technique, the interest cost is computed by multiplying the sector price times the beginning-of-period book value. As the discount is amortized, the book value rises, resulting in the interest price to increase over time.
Because the complete interest expense is the very same regardmuch less of the technique supplied, the interemainder expense will certainly be less than straight-line in the previously years (and also better in later on years).
AMC Corporation issued bonds at a discount. The permanent licapacity reported in AMC"s balance sheet will:a. Increase each year during the term to maturity.b. Decrease annually throughout the term to maturity.c. Remain the very same each year in the time of the term to maturity.d. Increase or decrease each year relying on the market rate of interemainder.
a. Increase each year during the term to maturity. The bonds are videotaped as maturity worth minus unamortized discount. As the discount is amortized to zero, the reported licapacity rises.

When a firm records bond interemainder at the efficient rate for bonds issued at a discount, its net income in the bond"s initially year will certainly be:a. Less than if the straight-line technique were provided.b. Higher than if the straight-line approach were supplied.c. The very same as if the straight-line method were provided.d. None of the over.
b. Higher than if the straight-line strategy were supplied.When bonds are issued at a discount, in the earlier years, interest expense is lower under the effective interest method than straight-line. As such, net earnings is higher.

Brubaker Company kind of issued 11% bonds, dated January 1, through a face amount of $400,000 on January 1, 2018. The bonds marketed for $369,908 and also mature in 2035 (20 years). For bonds of equivalent danger and also maturity the industry yield was 12%. Interemainder is paid semieach year on June 30 and also December 31. Brubaker determines interemainder at the effective rate and also elected the option to report these bonds at their fair value. On December 31, 2018, the fair worth of the bonds was $365,000 as determined by their industry worth on the NYSE. Brubaker"s statement of detailed income for the year will certainly include:a. A get from readjust in the fair value of debt of $5,309.b. A loss from change in the fair worth of debt of $5,309.c. A gain from adjust in the fair value of debt of $5,102.d. A loss from readjust in the fair worth of debt of $5,102.
a. A get from adjust in the fair worth of debt of $5,309.This is the difference between the fair value and also the book worth at Dec. 31, wbelow the book worth is the $369,908 raised by the discount amortization on June 30 and also Dec. 31. Any percentage of the adjust in fair worth attributable to a adjust in general interest rates is reported in net income; any type of percentage as a result of a change in credit hazard is reports as OCI.
Either means, net income or OCI, it increases full detailed income.
Brown Corporation exercised its contact alternative to retire irreversible notes. The excess of the cash passist over the book value of the notes must be reported as a(an):a. Gain from disongoing operations.b. Gain from continuing operations.c. Loss from discontinued operations.d. Loss from continuing operations.
d. Loss from proceeding operations.When the amount phelp to retire debt is greater than the moving worth of the debt, a loss is reported. Gains and also losses from retiring long-term notes perform not require special reporting and are included as component of proceeding operations.

National Storage issued $90 million of its 10% bonds on April 1, 2018, at 99 plus accrued interemainder. The bonds are dated January 1, 2018, and also mature on December 31, 2035. Interemainder is payable semiannually on June 30 and also December 31. What amount did National obtain from the bond issuance?a. $86.85 millionb. $89.10 millionc. $90.00 milliond. $91.35 million
d. $91.35 millionNational Storage got $89.1 million from the sale of the bonds ($90 million x .99) and $2.25 million in accrued interemainder ($90 million x .05 x 3/6) or ($90 million x .10 x 3/12).
On March 1, 2018, Big Brands Corporation issued $600,000 of 10% bonds at 105. Each $1,000 bond was marketed via 50 detachable stock warrants, each permitting the investor to purchase one share of common stock for $35. On that date, the industry value of the common stock was $30 per share and also the market value of each warrant was $4. Big Brands should record what amount of the proceeds from the bond problem as a boost in liabilities?a. $510,000b. $600,000c. $630,000d. $0
a. $510,000Big Brands got $630,000 from the problem of the 600 bonds and also 30,000 warrants (600 bonds x 50 warrants per bond). The full industry worth of the warrants is $120,000 (30,000 warrants x $4). Thus the continuing to be $510,000 of the proceeds is allocated to the bonds.
On June 30, 2018, Kerr Industries had exceptional $40 million of 8%, convertible bonds that mature on June 30, 2019. Interemainder is payable each year on June 30 and December 31. The bonds are convertible right into 2 million shares of $10 par common stock. At June 30, 2018, the unamortized balance in the discount on bonds payable account was $2 million. On June 30, 2018, fifty percent the bonds were converted once Kerr"s prevalent stock had a sector price of $25 per share. When recording the convariation using the book value method, Kerr have to crmodify paid-in resources - excess of par:a. $8 millionb. $9 millionc. $11 milliond. $12 million
b. $9 millionThe book worth of the bonds converted is $19 million. This is the book value of the 1 million prevalent shares issued. Par value is $10 million, leaving $9 million for paid-in capital—excess of par.

See more: Word For Not Wanting To Do Something But Doing It Anyway, Anyway Synonyms With Definition


On September 1, 2018, Expert Materials, issued at 98 plus accrued interest, $800,000 of its 10% bonds. The bonds are dated June 1, 2018, and mature on May 30, 2026. Interest is payable semiannually on June 1 and December 1. At the moment of issuance, Expert would get cash of:a. $784,000b. $803,600c. $804,000d. $820,000
On September 1, 2018, Conmomentary Products, issued $16 million of its 10% bonds at challenge value. The bonds are dated June 1, 2018, and also mature on May 30, 2026. Interest is payable semiyearly on June 1 and December 1. At the moment of issuance, Contemporary Products would certainly get cash proceeds that would certainly include accrued interest of:a. Zero.b. $200,000 .c. $400,000.d. $1.6 million.
})}else;window.area.assign("https://steustatiushistory.org/explanations/textbook-solutions/principles-of-economics-8th-edition-9781305585126");">
*

})}else;window.location.assign("https://steustatiushistory.org/explanations/textbook-solutions/essentials-of-investments-10th-edition-9780077835422");">
*

})}else;window.area.assign("https://steustatiushistory.org/explanations/textbook-solutions/managerial-economics-business-strategy-8th-edition-9780073523224");">
*

})}else;window.area.assign("https://steustatiushistory.org/explanations/textbook-solutions/krugmans-macroeconomics-for-ap-1st-edition-9781429257305");">
*

Krugman"s Macrobusiness economics for AP*first EditionDavid Anderkid, Margaret Ray
566 explanations
Sets uncovered in the same folder
home window.steustatiushistory.org<"productClickLinkData"> = <"name":"Chapter 6","id":"470356453","price":"","category":"premium content","variant":"examine guide","position":"","brand":"TheTorturedStudent">; QLoad("steustatiushistory.org.productClickLinkData"); return;})}elsewindow.steustatiushistory.org<"productClickLinkData"> = <"name":"Chapter 6","id":"470356453","price":"","category":"premium content","variant":"study guide","position":"","brand":"TheTorturedStudent">; QLoad("steustatiushistory.org.productClickLinkData"); return;;home window.place.assign("https://steustatiushistory.org/470356453/chapter-6-flash-cards/");" id="1-470356453">
Chapter 6
14 terms
TheTorturedStudentPLUS
home window.steustatiushistory.org<"productClickLinkData"> = <"name":"Chapter 14","id":"470380073","price":"","category":"premium content","variant":"examine guide","position":"","brand":"TheTorturedStudent">; QLoad("steustatiushistory.org.productClickLinkData"); return;})}elsehome window.steustatiushistory.org<"productClickLinkData"> = <"name":"Chapter 14","id":"470380073","price":"","category":"premium content","variant":"research guide","position":"","brand":"TheTorturedStudent">; QLoad("steustatiushistory.org.productClickLinkData"); return;;home window.area.assign("https://steustatiushistory.org/470380073/chapter-14-flash-cards/");" id="1-470380073">
Chapter 14
40 terms
TheTorturedStudentPLUS
home window.steustatiushistory.org<"productClickLinkData"> = <"name":"Intermediate Accounting 2 Exam 3","id":"493906054","price":"","category":"premium content","variant":"examine guide","position":"","brand":"TheTorturedStudent">; QLoad("steustatiushistory.org.productClickLinkData"); return;})}elsehome window.steustatiushistory.org<"productClickLinkData"> = <"name":"Intermediate Accounting 2 Exam 3","id":"493906054","price":"","category":"premium content","variant":"examine guide","position":"","brand":"TheTorturedStudent">; QLoad("steustatiushistory.org.productClickLinkData"); return;;home window.place.assign("https://steustatiushistory.org/493906054/intermediate-accounting-2-exam-3-flash-cards/");" id="1-493906054">
Intermediate Accounting 2 Exam 3
66 terms
TheTorturedStudentPLUS
home window.steustatiushistory.org<"productClickLinkData"> = <"name":"Chapter 16 Intermediate Accounting 2 Concepts & Exam 3 Roll Over Topics","id":"498025788","price":"","category":"premium content","variant":"research guide","position":"","brand":"TheTorturedStudent">; QLoad("steustatiushistory.org.productClickLinkData"); return;})}elsewindow.steustatiushistory.org<"productClickLinkData"> = <"name":"Chapter 16 Intermediate Accounting 2 Concepts & Exam 3 Roll Over Topics","id":"498025788","price":"","category":"premium content","variant":"examine guide","position":"","brand":"TheTorturedStudent">; QLoad("steustatiushistory.org.productClickLinkData"); return;;home window.place.assign("https://steustatiushistory.org/498025788/chapter-16-intermediate-accounting-2-concepts-exam-3-roll-over-topics-flash-cards/");" id="1-498025788">