Reference no: EM133017489
Question - On January 1, 2020, Naruto Company, a financial service firm, purchased P100,000, face value 5-year bond of Wolverine Corporation for P108,660, a price that yields 5% on a stated interest rate of 7%. Interest is payable annually at December 31. Fair values at year-end are as follows:
December 31, 2020 106.5
December 31, 2021 107.5
December 31, 2022 105.7
December 31, 2023 106.0
Naruto's business model for managing debt securities of this type is collecting cash flows that are solely payment for principal and interest. Naruto did not exercise its option to measure the investments at fair value.
Towards the end of 2022, after reviewing it strategic direction, Naruto decides to shut down it retail mortgage business and actively markets its debt investments portfolio in response to profit taking opportunities.
Naruto sold the Wolverine Corporation bonds on May 31, 2023 @106 plus accrued interest.
Requirements -
a. How much interest income should Naruto recognize for the year 2020 as a result of this investment?
b. At what amount should the investment be shown on December 31, 2021 statement of financial position?
c. Prepare entries in the books of Naruto relating to the foregoing for years 2022 and 2023.
|
Prepare the acquisition analysis and journal entries
: For the year ended 30 June 2020, Orange Ltd recorded an after tax profit of $50,000. Prepare the acquisition analysis and journal entries
|
|
Security needs and objectives
: Describe the business needs of the organization that you have researched. Compare the security policy with the business needs.
|
|
Difference between upselling and cross-selling
: 1) Explain the difference between upselling and cross-selling - using at least two examples for each.
|
|
How practice impacted the workplace
: Post two key insights you had from the scholarly resources you selected. Describe a leader whom you have seen use such behaviors and skills, or a situation wher
|
|
How much interest income should Naruto recognize
: On January 1, 2020, Naruto Company, a financial service firm, purchased P100,000, How much interest income should Naruto recognize
|
|
Major elements and dimensions of culture in japan
: What are the major elements and dimensions of culture in Japan?
|
|
Encourages and allows constructive feedback exchanges
: How would make a climate that encourages and allows constructive feedback exchanges (both receiving and giving)?
|
|
Build an effective organizational and workplace culture
: How could you build an effective (strategy driven) organizational and workplace culture?
|
|
What yield to maturity do they expect to receive
: The expectation is that investors will receive only 80% of face value at maturity. If they buy the bond today, what yield to maturity do they expect to receive
|