1. A company owns 8% bonds with a par value of $114,000 that pay interest on oct
ID: 2373577 • Letter: 1
Question
1. A company owns 8% bonds with a par value of $114,000 that pay interest on october 1 and april 1. The bonds were purchased on october 1st. The amount of interest accrued on december 31 (the company's year- end) would be ( do not round your intermediate calculations):
a) 9120
B) 760
c) 4560
D) 2280
E) 1520
2. All of the following statements regarding accounting for noninfluential securities under U.S GAAP and IFRS are True except:
a) Trading securities are accounted for using fair values with unrealized gains and losses reported in other comprehensive income.
b) Held to maturity securities are accounted for using amortized cost.
c) Trading securities are accounted for using fair values with unrealized gains and losses reported in net income.
d) Available for sale securities are accounted for using fair values with unrealized gains and losses reported in other comprehensive income.
e) Both systems examine held to maturity securities for impairment.
Explanation / Answer
1)
accrued interest = 8/100 * 3/12 * 114000 = $2280
Hence D) 2280
2) e) Both systems examine held to maturity securities for impairment.
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