ACCT:2100 Introduction to Financial Accounting Chapter 10 Group Exercise 2018 31

Question

ACCT:2100 Introduction to Financial Accounting Chapter 10 Group Exercise 2018 31.2016. calculate the present value factor). 1. Switzerland sold 100 million Swiss Francs of three-year, zero coupon bonds on M The yield on the bonds was-1%. Prepare the three-year amortization schedule for the bond. (Hint: You will need to use the present value formula (S/(1 i) to EU 103,0o a) Prepare the adjusting journal entry necessary at 12/31/17. 2. Explain why the interest rate on the Greek bonds was higher than the rate on the Swiss bonds. 3. Explain why investors would accept a negative interest rate on the Swiss bonds.

Explanation / Answer

Ans 1 Present value =100/(1-.01)^3 103.06 Year Interest expenses (-1%) Amortized Premium on issue of bonds Unamortized premium Facle value Carrying Value 0 3.06 100 103.06 1 -1.03 -1.03 2.03 100 101.03 2 -1.01 -1.01 1.02 100 100.01 3 -1.00 -1.00 0.02 100 100.0 ans 2 Dr Cr Premium on Issue of bOnds 0.77 Interest Revenue 0.77 (1.03*9/12) As interest rate is negative hence we will credit interest revenue

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.