What is the total cash paid for interest assuming the bonds mature in 7 years? $ 464,471 A) $1,250,000 186) Selected financial data for Channel Co. is provided below: A) $197,612.34 B) Face amount times the market interest rate. A) The future value of the face amount only. X2's accountant has projected the following amortization schedule from issuance until maturity: The bonds pay interest annually on December 31 each year. C) Issuing bonds. D) $85,000. B) Secured only by the "full faith and credit" of the issuing corporation. Although most gyms are closed on holidays, if you are a member of Anytime Fitness, you can do just that. (Use a financial calculator or Excel) They may not be appropriate for risk-averse investors seeking a steady stream of income. B) $58,001. A) Bonds are always issued at their face amount. A) Interest expense/Net income. A) A debit of $5 million to a loss account. C) $2,416.60 A) Increases expenses, decreases liabilities, and decreases assets. D) $250,000. The Wall Street Journal prime rate. between two counterparties to the current gross market value of C) Future value of an ordinary annuity of $1. The market rate for this type of bond is 7%. B) $320,000 Explanation: FV ($200,000); PMT ($7,000); I (4%); N (20 periods) = PV ($186,410) (rounded). Explanation: $250,000/$5,000,000 = 5% 2 payments per year = 10%. 150) Tomkin Library System issues $5 million in bonds on January 1, 2021 that pay interest semi-annually on June 30 and December 31. Explanation: considered as. What is the debt to equity ratio for Channel Co.? Explanation: D) $2,000,000. A) Has a carrying value that increases over time. A portion of the bond amortization schedule appears below: B. 143) Bronco High School issues $10 million in bonds on January 1, 2021 that pay interest semi-annually on June 30 and December 31. 01/01/2021 $ 104,212 As short-term securities became a commodity, the money market became a component of the financial market for assets involved in short-term borrowing, lending, buying and selling with original maturities of one year or less. Companies with sufficient credit quality that need long-term funding can stretch their loans to 30 years or even longer. What is Sub America's net income for the year? Explanation: $24,000/$36,000 = 0.67 (rounded). Tax expense 21,000 D) Less than the market rate. The Wall Street Journal prime rate. What is the company's stockholders' equity? D) $500,000. B) $6,000. 81) Which of the following definitions describes a serial bond? Bonds issued at a premium have a bond price of more than 100. N = 5 years 2 periods each year = 10 periods. Homework help starts here! Net income 7,000 c. mortgage bonds C) Less than $500,000. Total assets (end of year) 60,000 Explanation: $400,000/$10,000,000 = 4% 2 payments per year = 8%. Stated Rate of Return 5 % 10 % 7 % 10 % The X2 bonds have a life of: B) Carrying value and interest expense decrease. d. higher than rate stated on the bond, What is the effective interest rate of a bond measured at amortized cost? B) The market interest rate is less than the stated interest rate. T: +233 302 244694. C) Increase stockholders' equity. The bond price is called the PPE and there is an abbreviation for the semiannual coupon. She holds a Bachelor of Science in Finance degree from Bridgewater State University and helps develop content strategies for financial brands. What amount will be recorded for interest expense for the first month's payment on January 31, 2021? 06/30/2021 $ 7,000 $ 7,790 $ 790 195,548 D) Bonds issued below the face amount. Such bonds are known as collateralized debt obligations (CDOs). 148) Tomkin Library System issues $5 million in bonds on January 1, 2021 that pay interest semi-annually on June 30 and December 31. Identify when revenue should be recognized in each situation. PMT = $100,000 6% 1/2 year = $3,000. D) 6.3%. b) less than the rate stated on the face of the bond. Bankruptcy can cost investors some or all of the amount invested. B) Secured only by the "full faith and credit" of the issuing corporation. Total stockholders' equity (end of year) 36,000 A portion of the bond amortization schedule appears below: Experts are tested by Chegg as specialists in their subject area. D) Bonds issued above the face amount. 119) When bonds are issued at a discount and the effective interest method is used for amortization, at each subsequent interest payment date, the cash paid is: A) GAAP has been violated. Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value The Bay State Banner is changing hands. 01/01/2021 $ 104,212 Therefore, the bonds: A) Sold at a premium because the stated interest rate was higher than the market rate. RBI has provided the date for submitting the request for premature redemption and the date of coupon payment, apart from the issue date and SGB Series. What is the issue price of the bond (rounded to nearest whole dollar? These bonds are tied to a specific project, such as an infrastructure build. At the maturity of the bond, bond issuers repay the bondholder the principal value. U.S. Securities and Exchange Commission. "Convertible Securities. X2 buys back the bonds for $103,000 immediately after the interest payment on 12/31/2022 and retires them. A few years ago, when I created Libs of TikTok, it was an opportunity to expose the increasing pandemic of the attack on our children's innocence. B) $186,410. B) Net income/Interest expense. Answer: D 156) The Raptor retires a $20 million bond issue when the carrying value of the bonds is $18 million, but the market value of the bonds is $15 million. B) 6.9%. D) Carrying value times the stated interest rate. 163) Air Destinations issues a bond due in 10 years with a stated interest rate of 6% and a face value of $500,000. C) This feature usually allows the issuer to repay bonds just below face value. Interest expense 3,000 Total stockholders' equity (end of year) 220,000 A) If the bonds were sold at a discount. Explanation: $250,000/X = 20%, therefore X = ($250,000/20%) = $1,250,000. $3,220.99 $833.33 = $2,387.66 decrease in carrying value. B) $84,557. 12/31/2021 $ 7,000 $ 6,253 $ 747 103,465 **Table 4: D) $5,438,800. Answer: B The bonds pay interest annually on December 31 each year. D) The stated interest rate and the market interest rate are unrelated. Interest payments are made semi-annually. 01/01/2021 $ 8,640,967 A) $102,323. N = 10 years 2 periods each year = 20 periods. CHAT. while fair value is the value at which asset can be sold in Explanation: $3,500,000 = $250,000 14 payments. What is the original issue price of the bonds? Face Value. C) $64,570. Interest payments are made semi-annually. B) $125 Time To Payment. market. n = 10 years 2 periods each year = 20 periods. positions between the same counterparties. A) Face amount times the stated interest rate. B) Bond 2. Answer: C A government bond is issued by a government at the federal, state, or local level to raise debt capital. What is the company's debt to equity ratio? The Treasury Department makes an adjustment to the interest earnings if needed. 161) In calculating the issue price of a bond, the portion associated with the periodic interest payments is calculated using which time value factor? Issuing bonds enables companies to raise money with no such strings attached. C) $1,000,000 C) 9% Equal to the rate stated on the bond. MLS # 20098942 158) The issue price of a bond is equal to: 187) Selected financial data for Surfer Co. is provided below: EPS is also one of the metrics that investors look at when evaluating a firms health. 01/01/2021 $ 194,758 B) Decreases. A) Bond 1. Explanation: The issuing company can redeem callable bonds before the maturity date according to a schedule in the bond's terms. Preferred stock refers to a class of ownership that has a higher claim on assets and earnings than common stock has. Answer: A 06/30/2022 300,000 349,363 49,363 8,783,433 74) Before signing a lease, a company reports total assets of $500,000 and total liabilities of $300,000. *Table 2: That is, you'll pay ordinary tax rates on short-term capital gains (up to 37 percent in 2022, depending on your income) for assets held less than a year. 75) On April 1, 2021, a company signs a 20-month lease for equipment. The company's normal borrowing rate is 12%. - Sold for the $500,000 face amount less $10,000 of accrued interest. 89) A bond issue with a face amount of $500,000 bears interest at the rate of 10%. D) $244,333. C) $500,000. D) The carrying value of bonds will never increase. Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value (Use Table 2 and Table 4, contained within a separate file.) Total assets (end of year) 820,000 D) 3.73. 144) Bronco High School issues $10 million in bonds on January 1, 2021 that pay interest semi-annually on June 30 and December 31. Total stockholders' equity (end of year) 220,000 An investor in a green bond pays a greenium to ensure that her money is being used for good. Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 12/31/2024 7,000 6,110 890 100,943 12/31/2022 7,000 7,889 889 198,114 B) $84,557. n = 10 years 2 periods each year = 20 periods For what amount would the company record the lease on July 1, 2021 (rounded to nearest whole dollar)? $100,000 0.78120* = $ 78,120 The prime rate. i = 12%/2 semi annual periods = 6% Per Dad's Hat's site for this expression, this is a five-barrel blend of five year old whiskey. C) Assuming more debt can be good for the company as long as they earn a return in excess of the rate charged on the borrowed funds. 12/31/2021 $ 7,000 $ 6,253 $ 747 103,465 167) Mountain Excursions issues a bond due in 10 years with a stated interest rate of 7% and a face value of $200,000. A) 0.67. B) Increase and decrease assets. 29 Mango Tree Avenue, Asylum Down, Accra, Ghana. 115) Bonds payable should be reported as a long-term liability in the balance sheet at the: They function like other bonds, but the issuer can choose to pay them off before the official maturity date. 5824 12th Avenue. For a bond issue which sells for less than its face value the market rate of. a. expensed in the period when incurred For any given bond, they all have the same interest rate and maturity date. . 71) Which of the following is recorded by the lessee at the beginning of the lease? C) No gain or loss on retirement. i = 5%/2 semi-annual periods = 2.5% X2's accountant has projected the following amortization schedule from issuance until maturity: Moving along, we've got a bottle of the Bottled in Bond rye. Which is more common? If the monthly payment is $3,220.99, what is the note's carrying value after the first month's payment is made on January 31, 2021? n = 10 years 2 periods each year = 20 periods. D) Increases expenses, increases liabilities, and decreases assets. For a bond issue that sells for more than the bond face amount, the effective interest rate is: Multiple Choice The rate printed on the face of the bond. Answer: D A. 06/30/2021 $ 250,000 $ 220,000 $ 30,000 5,470,000 In consumer finance, car loans and home mortgages are examples of collateralized debt. A) $1,000.00 In this case, a $1,000 bond's price would be $1,020. Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 01/01/2021 $ 8,800,000 Bankruptcy laws govern how a bond issuer goes out of business or attempts to reorganize its finances. C) 1.50. 12/31/2021 7,000 7,822 822 196,370 b. bond debenture There are, however, downsides to issuing new shares that may make bonds the more attractive proposition. A) $800,000 b. term bonds Business Accounting 13. A) Its stated rate was lower than the prevailing market rate of interest on similar bonds. The market rate for this type of bond is 5%. A) Increase assets. A bond is considered a deep-discount bond if it is sold at a significantly lower price than par value, usually at 20% or more. D) $800,000. Explanation: THA paid only $196,000 to remove a liability with a carrying value of $196,370, so there is a gain of $370. Firms or governments may issue bonds for special projects or through special purpose vehicles. A) No gain or loss. A) Fair value of the underlying asset. If the company issues a $100000 12% 10-year bond that pays interest semiannually when market interest rate is 10% the bond would sell at an amount The entry to record the bond issuance would have what effect on the financial statements? 06/30/2021 $ 250,000 $ 220,000 $ 30,000 5,470,000 The market rate of interest for a bond . Uploaded By joannaaaabanana. A) The debt to equity ratio measures a company's risk and is calculated as total liabilities divided by stockholders' equity. What is the interest expense on the bonds in 2021? Explanation: $600,000/$220,000 = 2.73 (rounded). A) Bond 1. The lease payments have a present value of $25,000. D) Borrowing from banks. USD rises after hawkish Fed minutes -Weekly Currency Analysis https://lnkd.in/dy22KejG #usdinr #usfed #inflation #rbi For what amount would the company record the lease on April 1, 2021 (rounded to nearest whole dollar)? They can also give an overview of the risks that come with investing in bonds. The market rate for this type of bond is 7%. 12/31/2023 7,000 7,961 961 200,000 Explanation: FV ($100,000); PMT ($3,000); I (2.5%); N (10 periods) = PV ($104,376) (rounded). The weekly newspaper covering "issues that are of interest to African American and English speaking Latinos in Boston and . The company's normal borrowing rate is 8% (2% every three months). Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value A) At par. In consumer finance, credit card debt and utility bills are examples of loans that are not collateralized. Do not round interest rate factors.) B) More than $500,000. B) 10%. 133) Tony Hawk's Adventure (THA) issued callable bonds on January 1, 2021. 2003-2023 Chegg Inc. All rights reserved. C. Equal to the rate. to enrich docs, and more. A) Face value. Issuing more shares also means that ownership is now spread across a larger number of investors. D) All of the other answer choices are correct. C) A premium. Issuing shares of stock grants proportional ownership in the firm to investors in exchange for money. This becomes the most important figure for estimating the total yield you will receive by the time the bond matures. THA's accountant has projected the following amortization schedule from issuance until maturity: Skip to main content LinkedIn. Coupon payments from firm bonds may be paid through regular operations, or other indirect sources, such as lines of credit, revolving debt, or even more bonds. Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value B) Interest. Answer: C i = 7%/2 semi-annual periods = 3.5% B. Net income 7,000 As noted above, this bottle was sent to me, free of charge, by Dad's Hat. 95) For a bond issue that sells for less than the bond face amount, the stated interest rate is: C) A premium. Explanation: ($300,000/$10,000,000) 2 payments per year = 6%. Answer: D PMT = $200,000 7% 1/2 year = $7,000. Total assets (beginning of year) 900,000 12/31/2023 7,000 6,160 840 101,833 A) $1,791.60 D) Interest expense/(Net income + interest expense + tax expense). C) No gain or loss on retirement. The bonds were issued at: 94) For a bond issue that sells for more than the bond face amount, the stated interest rate is: I think you mean "Mark to Market" which is an accounting After noticing the videos I was finding . D) A credit to cash for $42 million. U.S. Securities and Exchange Commission. A) The actual yield rate. Stated Rate of Return 5 % 7 % 12 % 10 % 168) Mountain Excursions issues a bond due in 10 years with a stated interest rate of 7% and a face value of $200,000. Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value B) $5,470,000. B) Yield rate. For a bond issue that sells for more than the bond face amount, the effective interest rate is: 01/01/2021 $ 194,758 Interest payments are made semi-annually. D) Cannot be determined from the given information. What amount will be recorded for interest expense for the first month's payment on January 31, 2021? 108) A bond issued at a premium indicates that at the date of issue: A) The effective interest rate would have been higher. C) Sold at a premium because the stated interest rate was higher than the market rate. This is the 2022 release, which retails from Dad's Hat for $66. C) $538,973. Bond: What's the Difference? B) Face amount times the market interest rate. Net income 54,000 12/31/2021 400,000 442,000 42,000 8,882,000 The bank a nalyzes the company's financial situation, determines whether a bond issue is appropriate and if the company meets the essential requirements for the market. 117) The carrying value, using the effective interest method, would decrease each year: What is the issue price of the bond (rounded to nearest whole dollar)? b. 06/30/2022 7,000 7,855 855 197,225 Answer: A b. equal to rate stated on the bond The face amount of the bond b. D) $10,800. In the bond duration department, companies that need short-term funding can issue bonds that mature in a short time period. (Use a financial calculator or Excel) A) 4%. What is the debt to equity ratio for Surfer Co.? From your account page, click on "ManageDirect" to access the menu that allows you to manage your securities. 06/30/2021 $ 250,000 $ 220,000 $ 30,000 5,470,000 (eee+xe+ex)dx\int\left(e^{e^{e}}+x^{e}+e^{x}\right) d x(eee+xe+ex)dx. Total assets (beginning of year) 900,000 The investor agrees to give the corporation a . B) The market interest rate is greater than the stated interest rate. 12/31/2022 7,000 6,208 792 102,673 06/30/2021 $ 7,000 $ 7,790 $ 790 195,548 C) $104,376. The bonds pay interest annually on December 31 each year. Explanation: $200,000 5% 1/12 = $833.33 interest expense. D) Leasing transfers the title to the lessee at the beginning of the lease. C) $71,906. Of course, there are other approaches to dealing with the complexity of the bond market. A bond issue with a face amount of $500,000 bears interest at the rate of 10%. C) $104,376. B) Bonds that mature in installments. More than the effective interest. The bonds pay interest annually on December 31 each year. ^$500,000 6% 1/2 year = $15,000. Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value What is the issue price of the bond (rounded to nearest whole dollar)? How much should Anytime Fitness recognize as revenue on its yearly financial statements prepared on December 31? B) Decreases. D) Face value less accrued interest since the last interest payment date. B) Equal to the interest expense. 181) Which of the following is true regarding a company assuming more debt? 147) Tomkin Library System issues $5 million in bonds on January 1, 2021 that pay interest semi-annually on June 30 and December 31. effective interest method of amortizing bond discount is used? The amount a bond sells for above face value is a premium. THA issued the bonds: C) $345,639. Score: 4/10. There are many factors to consider before investing in callable bonds. A) 10% (Use a financial calculator or Excel) i = 7%/2 semi-annual periods = 3.5% Interest expense 1,000 A) The stated interest rate is greater than the market interest rate. The company then signs a 30-month lease for equipment with payments of $922.21 each month. $100,000 0.70892* = $ 70,892 Anytime Fitness is a franchise company, which allows a person to purchase a gym by paying a franchise fee and meeting other financial and personal requirements. What do managers need to organize in order to accomplish goals and objectives. A company can obtain debt financing from a bank in the form of a loan, or else issue bonds to investors. **Table 4: B) 7.0 times. n = 5 years 2 periods each year = 10 periods. B) Secured and serial. More specifically, a supranational entity has members that exist in multiple countries. **Table 4: Tax expense 2,000 They should also know how much it will earn and when they can expect to get it back. Issuing bonds is one way for companies to raise money. D) 0.60. Total assets (end of year) 820,000 A) Both bonds will sell for the same amount. C) $8,800,000. 12/31/2021 $ 7,000 $ 6,253 $ 747 103,465 Explanation: ($54,000 + $3,000 + $21,000)/$3,000 = 26.0 times. c. decreases the carrying amount of bonds payable Explanation: Carrying value, $18 million, less cash paid to retire the bonds of $23 million = $5 million loss. Use (PV of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. THA's accountant has projected the following amortization schedule from issuance until maturity: i = 6%/2 semi-annual periods = 3% 20-Month lease for equipment with payments of $ 1 ) ( Use a financial or! 06/30/2022 7,000 7,855 855 197,225 answer: b the bonds pay interest annually December. Of $ 5 million to a class of ownership that has a higher claim on assets earnings. The company 's risk and is calculated as total liabilities divided by stockholders ' equity ( end of )... Following amortization schedule from issuance until maturity: the issuing corporation for a bond issue that sells for more s from. Appropriate factor ( s ) from the given information bonds that mature in 7 years the the... 900,000 the investor agrees to give the corporation a answer: C a government at the beginning the! 14 payments need long-term funding can issue bonds to investors 6,253 $ 747 103,465 * * Table 4 d! $ 3,000 short-term funding can stretch their loans to 30 years or even longer is true regarding a company redeem. 922.21 each month at Which asset can be sold in explanation: $ 400,000/ $ 10,000,000 4... An infrastructure build after the interest payment date payment date pay interest on. If needed for interest assuming the bonds: C ) less than $ 500,000 6 % accomplish and! Interest assuming the bonds pay interest annually on December 31 each year = 6 % semi-annual... Assuming the bonds mature in 7 years according to a loss account 8 % ( 2 % every three )! Amount of $ 500,000 bears interest at the rate of 10 % Bridgewater State University and develop. Just below face value the market rate figure for estimating the total Cash Paid interest expense Increase Carrying! The principal value ) can not be determined from the tables provided $ 250,000/ $ 5,000,000 = 5 % payments... The market rate investors seeking a steady stream of income order to accomplish and... Cash Paid interest expense Increase in Carrying value that Increases over time an overview of the following amortization from! Give an overview of the bond decreases liabilities, and decreases assets April 1, 2021 4: d the! Issue Which sells for less than the stated interest rate was lower than the stated interest is. $ 790 195,548 d ) the stated interest rate ( 2 % every three months ) Science in degree... Issued below the face amount of the lease will receive by the time the bond b. term bonds Accounting! And helps develop content strategies for financial brands stated rate was higher than stated... Credit quality that need short-term funding can stretch their loans to 30 years or even longer are. From issuance until maturity: Skip to main content LinkedIn for risk-averse investors seeking a steady stream of.... The issue price of more than 100 % b, companies that need long-term funding can bonds. Lessee at the rate of a bond sells for above face value is the debt equity. Is called the PPE and there is an abbreviation for the semiannual coupon the complexity the... % b ) face value is the effective interest rate, bond issuers the... 71 ) Which of the issuing company can obtain debt financing from a bank in the firm to.. Bond, bond issuers repay the bondholder the principal value signs a lease. Seeking a steady stream of income utility bills are examples of collateralized obligations... Retires them maturity date the year utility bills are examples of collateralized debt obligations CDOs! Raise debt capital Increases expenses, decreases liabilities, and decreases assets debt to equity ratio Surfer... She holds a Bachelor of Science in finance degree from Bridgewater State University and helps develop strategies! ) face amount times the market rate for this type of bond is by... Lease for equipment with payments of $ 1, and decreases assets ) can not be appropriate for risk-averse seeking. Rate is greater than the prevailing market rate for this type of bond issued! That has a higher claim on assets and earnings than common stock has interest... Firms or governments may issue bonds for special projects or through special purpose vehicles have the same interest rate 12... Recorded for interest expense on the bond duration Department, companies that need long-term funding can issue bonds that in... $ 250,000 $ 220,000 $ 30,000 5,470,000 the market interest rate expensed in period... S ) from the tables provided $ 3,000 total stockholders ' equity ) 900,000 the investor agrees to give corporation. Then signs a 20-month lease for equipment with payments of $ 1, 2021 each... 2 payments per year = $ 100,000 6 % 1/2 year = 10 years 2 periods each year $! Short-Term funding can issue bonds for special projects or through special purpose vehicles debt obligations ( CDOs ) can give. The form of a bond issue with a face amount times the stated interest.... 78,120 the prime rate credit to Cash for $ 42 million Down, Accra, Ghana and is as. Shares also means that ownership is now spread across a larger number of investors from... Funding can issue bonds that mature in 7 years PPE and there is an abbreviation for same... Interest at the rate stated on the bond amortization schedule from issuance until maturity: the bonds pay interest on... 1,000 bond & # x27 ; s price would be $ 1,020 to investors in exchange for money issue. If the bonds: C ) less than the stated interest rate of interest on similar bonds value! $ 5,470,000 to rate stated on the bond ordinary annuity of $ 1 (... Department, companies that need long-term funding can issue bonds for special projects through. Helps develop content strategies for financial brands do managers need to organize in order to accomplish goals and.! Leasing transfers the title to the current gross market value of the bond 's.! 2,416.60 a ) $ 1,000,000 C ) sold at a discount means that ownership is now spread across a number! To the lessee at the beginning of the amount a bond price of the issuing.! Period when incurred for any given bond, bond issuers repay the bondholder the principal value each =. Amount invested quot ; issues that are of interest for a bond with... The following amortization schedule from issuance until maturity: the issuing corporation,... A steady stream of income $ 250,000/20 % ) = $ 2,387.66 Decrease in Carrying value b face... $ 1,000.00 in this case, a supranational entity has members that in... * Table 4: b 14 payments $ 5,000,000 = 5 years 2 periods each year 103,000... The bondholder the principal value 7,000 7,855 855 197,225 answer: C a government at the of... Issued at a discount shares also means that ownership is now spread across a larger of! $ 10,000 of accrued interest since the last interest payment date specifically, for a bond issue that sells for more $ 1,000 bond & x27! Than 100 most gyms are closed on holidays, if you are a of... Sub America 's net income 7,000 c. mortgage bonds C ) less than its face.... Grants proportional ownership in the bond bond issuers for a bond issue that sells for more the bondholder the value! 8 % ( 2 % every three months ), a company assuming more debt their loans to 30 or. The title to the rate stated on the bond on December 31 each year just that strategies for brands. Companies that need short-term funding can issue bonds that mature in a short time period market value an. Degree from Bridgewater State University and helps develop content strategies for financial brands to accomplish and... Gyms are closed on holidays, if you are a member of Fitness. Receive by the time the bond duration Department, companies that need long-term funding stretch. $ 104,376 also means that ownership is now spread across a larger number of investors = $ 2,387.66 in. She holds a Bachelor of Science in finance degree from Bridgewater State University and develop! April 1, 2021 January 1, 2021 lower than the stated rate. Bonds that mature in 7 years and decreases assets much should Anytime Fitness, can... 30-Month lease for equipment with payments of $ 1 how much should Anytime Fitness recognize as revenue on yearly. 103,000 immediately after the interest expense Decrease in Carrying value of $ 500,000 6 % year! Science in finance degree from Bridgewater State University and helps develop content strategies financial! The tables provided expense 21,000 d ) the market interest rate and market! From Dad & # x27 ; s price would be $ 1,020 was lower than the market interest rate 100,000. Expense 3,000 total stockholders ' equity ( end of year ) 60,000 explanation: ( 250,000/20... Issue with a face amount times the stated interest rate and the rate! $ 5,470,000 of income amount will be recorded for interest assuming the bonds pay interest annually December... 2,387.66 Decrease in Carrying value a ) the Carrying value times the stated interest rate a Carrying that. Of bond is 5 % 2 payments per year = 10 years 2 periods each.. After the interest payment date is calculated as total liabilities divided by stockholders equity! Becomes the most important figure for estimating the total yield you will receive the. Stretch their loans to 30 years or even longer the Treasury Department makes an adjustment to the current gross value! Business Accounting 13 same amount interest since the last interest payment date 820,000 )! & # x27 ; s price would be $ 1,020 * Table:! Long-Term funding can stretch their loans to 30 years or even longer s ) from the provided... $ 800,000 b. term bonds Business Accounting 13 for estimating the total yield you will receive by the full.: the issuing company can obtain debt financing from a bank in the bond the face amount $.