Prepare the journal entry to record the issuance

Assignment Help Accounting Basics

Reference no: EM131770695

Question: Coronado Limited issued 10-year, 7% debentures with a face value of $2.18 million on January 1, 2010. The proceeds received were $1.90 million. The discount was amortized on the straight-line basis over the 10-year term. The terms of the debenture stated that the debentures could be redeemed in full at any point before the maturity date, at a price of 105 of the principal. There was no requirement for a sinking fund.

On January 1, 2017, Coronado issued a mortgage at 101 with a principal of $3.3 million secured by land and building. The mortgage had a 25-year amortization period, with interest payable at 8%. Upon issuance of the mortgage, Coronado used the proceeds to redeem the 7% debentures. Coronado prepares financial statements in accordance with ASPE.

Additional Information for ASPE: ASPE-CPA Canada Handbook, Part II, Sections 1510, 1521, and 3856

There is specific guidance on measuring related party transactions.

Subsequent to initial recognition, liabilities are generally measured at amortized cost using the effective interest or other method (unless measured at fair value under the fair value option or because it is a derivative).

Where the fair value option is used, credit risk is incorporated into the measurement and resulting gains/losses are booked through net income.

Normally the balance sheet is segregated into current/non-current; however, this may not be appropriate for certain industries.

Refinanced long-term debt may be classified as long-term where refinanced by date of issue of financial statements.

1. Prepare the journal entry to record the issuance of the 8% mortgage January 1, 2017.

2. Prepare the journal entry to record the retirement of the 7% debentures on January 1, 2017.

3. Indicate the income statement treatment of the gain or loss on redemption of debentures. Assume that 2017 income before taxes and before any gain or loss on redemption of debentures is $1.90 million, the income tax rate is 19%, and the weighted average number of common shares outstanding is 1.30 million.

4. Calculate earnings per share.

Reference no: EM131770695

Questions Cloud

Will the smaller array receive truncated values : Will there be warning or error? Will the smaller array receive truncated values?

Describe the five types of sociotechnical interactions : Describe the five types of sociotechnical interactions. A hypothetical example of a medical informatics issue at play for the sociotechnical issue you selected.

Record straight-line amortization semiannually : The Coronado Company issued $300,000 of 10% bonds on January 1, 2017. The bonds are due January 1, 2022, with interest payable each July 1 and January 1.

Analyze the crime scene and provide a detailed : Analyze the crime scene and provide a detailed, step-by-step examination from initial discovery through admission of evidence at trial.

Prepare the journal entry to record the issuance : Coronado Limited issued 10-year, 7% debentures with a face value of $2.18 million on January 1, 2010. The proceeds received were $1.90 million.

Describe the role that professional health care organization : Describe the role that professional health care organizations and societies play in monitoring quality care. Disseminating preventative health care measures.

Determine quality and relevance to practice changes : While both approaches help the reader determine quality and relevance to practice changes, the AORN Research Evidence Appraisal is a more in-depth tool.

Discuss collects cash in advance and mails out the magazines : The company collects cash in advance and then mails out the magazines to subscribers each month

Discuss about the future of law enforcement in america : You are in control of the Discussion Board. Submit at least one well thought out post regarding the future of law enforcement in America.

User Account

All Pages