Page 1 of 3
REVIEW OF FINANCIAL ACCOUNTING THEORY AND PRACTICE
BOND INVESTMENT
1. The follow
following
ing data per
pertain
tain to Antique
Antique Copan!"
Copan!"#
# in$e#tent#
in$e#tent# in de%t #e&uritie#'
#e&uritie#'
Trading
A$aila%le
A$aila
%le for #ale
#ale
Co#t
-/,,,/,,,
-/,,,/,,,
-/,,,/,,,
Mar(et $alue
1)*+1*),,1)*+1*),,
-/),,/,,,
/-,,/,,,
/0,,/,,,
/0,,/,,,
/,,/,,,
/,,/,,,
2hat aount #hould Antique
Antique report a# unreali3ed gain in it# ),,- in&oe #tateent4
a. ,,/,,,
%. ),,/,,,
&. 0,,/,,,
d. 1,,/,,,
). On O&to%
O&to%er
er 1/ ),,),,-// Bangued Copan! a
a&quired
&quired 5),/,,,/
5),/,,,/,,,
,,, fa&e $alue
$alue 1)6 %ond#
%ond#
of Didigan Copan! at 11,
11, plu# a&&rued intere#t. The %ond# were dated 7ul! 1/ ),,
and will ature on 7une +,/ ),,8. Intere#t i# pa!a%le 7une +, and De&e%er +1. The
&oi#
&o
i##io
#ion
n to a&quir
a&quire
e the %ond#
%ond# wa# 55-,,/
,,/,,
,,,.
,. Th
The
e total
total ao
aoun
untt paid
paid for the
in$e#tent in %ond# wa#
a. )+/
+/1
1,,/,,
,,,
,
%. ))/9
)/9,,/,,
,,,
,
&. ))/)/-,,/,,
,,,
,
d. )1/8
1/8,,/,,
,,,
,
+. On 7ul! 1/ ),,
),,- Ta
Tagu
gu Copa
Copan!
n! pur&h
pur&ha#e
a#ed
d a# a long:ter
long:ter in$e#tent
in$e#tent in ;angiden
;angiden
Copan!
Cop
an!"#
"# 1,:!ea
1,:!earr 1)6 %ond
%ond#/
#/ wit
with
h fa&e $alue of 5),/,,,
5),/,,,/,,,
/,,,// for 510/-,,
510/-,,/,,
/,,,.
,.
Intere#t i# pa!a%le
pa!a%le #eiannuall
#eiannuall!
! on 7une +, and De&e%er +1. The %ond# ature
ature on
7ul! 1/ ),1,. Tagu u#e# the #traight line aorti3ation ethod. 2hat i# the aount of
intere#t in&oe that Tagu #hould report in it# ),,- in&oe #tateent4
/+-,/,
/,,,
,,
a. 1/+
%. 1/),
/),,/,,,
/,,,
&. 1/-,,/,,,
d. 1/,/,-,/,,,
/,,,
. On O&to%
O&to%er
er 1/ ),,
),,- Bu&a! C
Copan!
opan! pu
pur&ha#ed
r&ha#ed ),/,,, of
of the 51/,,,
51/,,, fa&e $alue 1)6
1)6
%ond# of Mana%o Copan! for 5)+/,,,/,,, in&luding a&&rued intere#t of 59,,/,,,.
The %ond# whi&h ature on 7anuar! 1/ ),1)/ pa! intere#t #eiannuall! on 7anuar! 1
and 7ul! 1. Bu&a!
Bu&a! u#ed the #traigh
#traightt line ethod
ethod of aorti3atio
aorti3ation
n and appropr
appropriate
iatel!
l!
re&orded the %ond#
%ond# a# a long:ter in$e#
in$e#tent.
tent. On the De&e%er
De&e%er +1/ ),,9 %alan&e
#heet the %ond# #hould %e reported at
a. ))/+
)/+,/,,
,,,
,
%. )1/
1/8
8),/,,
,,,
,
&. ))/0
)/00,/,,
,,,
,
d. ))/
)/,,/,,
,,,
,
-. On A
April
pril 1/ ),
),,-/
,-/ Calu!
Calu!a
a Copa
Copan!
n! pur
pur&ha#
&ha#ed
ed 5-/
5-/,,,/
,,,/,,,
,,, fa&e
fa&e $alue
$alue 86. Tr
Trea#
ea#ur!
ur!
note# for 5/89)/-,, in&luding a&&rued intere#t of 511)/-,,.
511)/-,,. The note# ature on 7ul!
1/ ),,9 and pa! intere#t #eiannuall!. Calu!a intend# to hold the note# to aturit!
aturit!.. In
it# O&to%er +1/ ),,- %alan&e #heet/ the &arr!ing aount of thi# in$e#tent #hould %e
a.
%.
&.
d.
/8
/0/0)
-,
,/,
/,,,
/,,,
,,

/8)
/,,,
/8+,/,,,
/8
/8-/,,,
/,,,
Page 2 of 3
9. ;u%a Co
Copan
pan!
! pur&
pur&ha#
ha#ed
ed %ond
%ond#
# at a di#&o
di#&ount
unt of 5-/
5-/,,,
,,,/,,
/,,,.
,. Su%#
Su%#eque
equentl!
ntl!// ;u%a
;u%a
#old the#e %ond#
%ond# at a preiu of 5)/,,
5)/,,,/,,,.
,/,,,. During the period
period that ;u%a held
held thi#
in$e#te
in$e
#tent/
nt/ aort
aorti3at
i3ation
ion of the di#&ount
di#&ount aoun
aounted
ted to 51/-,,
51/-,,/,,,
/,,,.. 2hat aount
aount
#hould ;u%a report a# gain on the #ale of the %ond#4
a.
%.
&.
d.
)/,,
/,,,/,,,
/,,,
-//-,
,,/,
/,,,
,,
+/-,,/,,,
+/,,
/,,,/,,,
/,,,
. On 7anua
7anuar!
r! 1/ ),,
),,-/
-/ Bu&lo
Bu&lo&
& Copan! a&q
a&quire
uired
d for 59/-,,/
59/-,,/,,,
,,, the entire
entire 50/,,,/,,
50/,,,/,,,
,
i##ue 1)6 #erial
#erial %ond#. Bond# of 5)/,,,/,,,
5)/,,,/,,, atur
ature
e at annual inter$al#
inter$al# %eginning
%eginning
De&e%er +1/
+1/ ),,-. Intere#t i# pa!a%le
pa!a%le #eiannu
#eiannuall!
all! on 7une +, and De&e%er
De&e%er +1.
2hat
2h
at i# the
the inte
intere
re#t
#t in&o
in&oe
e for
for ),,),,- u#
u#in
ing
g th
the
e %ond
%ond out#
out#ta
tand
ndin
ing
g eth
ethod
od of
aorti3ation4
a. 1//-9
9,/,
/,,,
,,
%. 1/+0
/+0,/,,,
/,,,
&.
0,/,,,
d.
89,/,,,
0. On 7anua
7anuar!
r! 1/ ),,-/
),,-/ ;a&u% Copan!
Copan! pur&ha#ed
pur&ha#ed 50/,,,/,,,
50/,,,/,,, fa&e $alue
$alue 1)6 %ond#
%ond# at
1),. Bon
Bond#
d# are due on 7anua
7anuar!
r! 1/ ),1- %ut &an %e redeeed
redeeed at earlier
earlier date# at
preiu $alue# a# follow#'
7anuar! 1/ ),, to De&e%er +1/ ),1,/ at 11,
7anuar! 1/ ),11 to De&e%er +1/ ),1/ at 1,
2hat i# the intere#t in&oe for ),,- u#ing the a&&elerated ethod of aorti3ation4
a. 1/+9
/+9,/,
,/,,,
%.
89,/,,,
-9,/,,,
&.
d.
0,,/,,,
8. On 7ul! 1/ ),,-/ Bolo&
Bolo& Copa
Copan!
n! pur&h
pur&ha#ed
a#ed 5)/
5)/,,,/,,,
,,,/,,, of Ea#t Copan!"
Copan!"#
# 06 %ond#
%ond#
due on 7ul!
7ul! 1/ ),1),1-.. Bolo& e<pe&t#
e<pe&t# to h
hold
old the %ond#
%ond# until
until aturit!.
aturit!. The %ond#
%ond# pa!
intere#t #eiannull! on 7anuar! 1 and 7ul!. The %ond# were pur&ha#ed for 51/-,/,,,
to !ield 1,6. In it# ),,- in&oe #tateent/ Bolo& #hould report intere#t in&oe at
a. 1-/,,,
%. 19,/,,,
&. 8)/-,,
d. 0/-,,
1,.On 7ul! 1/ ),,-/ Caga!an Copan! paid 58/-0-/,,, for 1,6 %ond# with a fa&e
aount of 50/,,,/,,,. Intere#t i# paid on 7une +, and De&e%er +1. The %ond# were
pur&ha#
pur&
ha#ed
ed to !ie
!ield
ld 06. Caga!a
Caga!an
n u#e
u#e#
# the effe&ti
effe&ti$e
$e intere#t
intere#t ethod to re&ogni3e
re&ogni3e
intere#t in&oe
in&oe fro thi# in$e#tent. 2hat #hould %e reported
reported a# the &arr!in
&arr!ing
g aount
of the %ond# in the De&e%er +1/ ),,-/ %alan&e #heet4
a. 8//-9
90/
/,,
,,
%. 8/9,
/9,1/9,,
/9,,
&. 8/--1/0,,
d. 8/91
/910/),,
/),,
Page 3 of 3
11. On 7u
7ul!
l! 1/ ),,),,-// Tug
ugue
uega
gara
rao
o Cop
Copan
an!
! pu
pur&
r&ha
ha#e
#ed
d a# a lo
long
ng te
ter
r in
in$e
$e#t
#te
ent
nt
50/,,
50/
,,,/,
,/,,,
,, of Ca
Cand
ndon
on Co
Copa
pan!
n!"#
"# 06 %o
%ond
nd#
# for 5/5/-,
,/,,
/,,,/
,/ in&lud
in&ludin
ing
g a&&rue
a&&rued
d
intere#t of 5+),/,,,. The %ond# were pur&ha#ed to !ield 1,6 intere#t. The %ond# pa!
intere#t
inte
re#t a
annu
nnuall!
all! o
on
n De&e%er
De&e%er +
+1.
1. Tu
Tugueg
guegarao
arao u#e#
u#e# the
the intere#t
intere#t etho
ethod.
d. In it#
De&e%
De&
e%er
er +1/
+1/ ),,),,- %ala
%alan&e
n&e #heet
#heet// what
what aount
aount #h
#houl
ould
d Tugue
uguega
garao
rao report
report a#
in$e#tent in %ond#4
a.
%.
&.
d.
/)
/)8
8)//-,,
,,
/),
/),/-,,
/-,,
/9)0/-,,
/++
/++-/,,,
/,,,
1).. On 7anu
1)
7anuar
ar!
! 1/ ),,
),,// Si
Si%a
%alo
lon
n Co
Cop
pan
an!
! pu
pur&
r&ha
ha#e
#ed
d a# a lo
long
ng:t
:ter
er
 in
in$e
$e#t
#te
ent
nt
5-/,,,/,
5-/,
,,/,,,
,, fa&e $alue of 06 %on
%ond#
d# for 5/-9)/
5/-9)/,,,
,,,.. The %ond#
%ond# were
were pur&ha#ed
pur&ha#ed to
!ield 1,6 intere#t.
intere#t. The %ond# pa! intere#t
intere#t annuall!
annuall! De&e%er +1. Si%alon u#
u#e#
e# the
intere#t ethod
ethod of aorti3atio
aorti3ation.
n. 2hat aount =rou
=rounded
nded to the neare#
neare#tt 51,,> #hould
Si%alon report on it# De&e%er +1/ ),,- %alan&e #heet for thi# long:ter in$e#tent4
a. /9
/90
0,/,
/,,,
,,
%. /99
/99)/,,,
/,,,
&. /910/,,,
d. /-9
/-9)/,,,
/,,,
1+.On
1+.
On 7ul! 1/ ),,-/ Solana Copan! pur&ha#ed Aulong
Aulong Copan!"# 1,:!
1,:!ear/
ear/ 06 %ond#
with fa&e aount of 50/,,,/,,,
50/,,,/,,, for 59/),/,,,.
59/),/,,,. The %ond# atu
ature
re on 7une +,/ ),1+
and pa! intere#t
intere#t #e
#eian
iannual
nuall!
l! on 7une +, and De&e
De&e%er
%er +1. ?#ing
?#ing the intere#t
intere#t
ethod/ Solana re&orded %ond di#&ount
di#&ount aorti3ation of 5)0/0,,
5)0/0,, for #i< onth# ended
De&e%e
De&
e%err +1/ ),,-.
),,-. @ro
@ro thi#
thi# long:ter
long:ter in$e#t
in$e#tent
ent// Solana #hould
#hould report
report ),,in&oe of
a.
%.
&.
d.
+0/0,,
)81/),,
+),/,,,
+0/,,,
1.. On 7anua
1
7anuar!
r! 1/ ),
),,,- Apar
parri
ri Copa
Copan!
n! pu
pur&h
r&ha#
a#ed
ed -:
-:!e
!ear
ar %o
%ond
nd#
# with
with fa&e
fa&e $a
$alue
lue of
50/,,,/,,, and #tated intere#t of 1,6 per !ear pa!a%le #eiannuall! 7anuar! 1/ and
7ul! 1. The %ond# were a&quired to !ield 06. 5re#ent $alue fa&tor# are'
5re#ent $alue of an annuit! of 1 for 1, period# at -6
5re#ent $alue of an annuit! of 1 for 1, period# at 6
2hat i# the pur&ha#e pri&e of the %ond#4
a.
%.
&.
d.
/+0)/,,
0/91/9,,
0/90/0,,
/+-1/),,
- end -
.)
0.11