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Sunday, November 14, 2010

Valix Finacc vol 1 Problem 12-22 to 25

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 12-22 to 25


Problem 12-22


Question 1 – Answer  A

Acquisition cost (4,400,000 – 100,000)                                                                        4,300,000
Amortization of premium from Oct. 1, 2007 to Dec. 31, 2008 (4,000 x 15)               (     60,000)                       
Book value – December 31, 2008                                                                              4,240,000

Monthly amortization (300,000/75 months)                                                                      4,000

Question 2 – Answer  B


Interest for 2008 (4,000,000 x 10%)                                                                                400,000
Amortization of premium (4,000 x 12 months)                                                                       (  48,000)
Interest income                                                                                                           352,000
                                                                                                                                   

Problem 12-23  Answer  B


Interest for 2008 (2,000,000 x 12%)                                                                                240,000
Amortization of discount (100,000/5)                                                                            20,000
Interest income                                                                                                           260,000

Problem 12-24  Answer  B

Premium on sale of bonds                                                                                          140,000
Unamortized discount (100,000 – 20,000)                                                                       80,000
Gain on sale of bonds                                                                                                 220,000

Problem 12-25  Answer  A

Acquisition cost – 1/1/2008                                                                                        3,767,000
Discount amortization for 2008:
     Interest income (14% x 3,767,000)                                                   527,380
     Interest received (12% x 4,000,000)                                                  480,000               47,380
Book value – 12/31/2008                                                                                           3,814,380

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