Note to be reported on Fallen’ s 2015 balance sheet $
( c) What is the effect of recording the fair value option on these notes on Fallen’ s 2016 income? The effect of recording the fair value option would result in unrealized holding
7) Holiday Company issued its 7 %, 25-year mortgage bonds in the principal amount of $ 3,019,000 on January 2, 2000, at a discount of $ 158,000, which it proceeded to amortize by charges to expense over the life of the issue on a straight-line basis. The indenture securing the issue provided that the bonds could be called for redemption in total but not in part at any time before maturity at 104 % of the principal amount, but it did not provide for any sinking fund.
On December 18, 2014, the company issued its 11 %, 20-year debenture bonds in the principal amount of $ 4,277,000 at 101, and the proceeds were used to redeem the 7 %, 25-year mortgage bonds on January 2, 2015. The indenture securing the new issue did not provide for any sinking fund or for redemption before maturity.
( a) Prepare journal entries to record the issuance of( 1) the 11 % bonds and( 2) the redemption of the 7 % bonds.( If no entry is required, select " No Entry " for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
8) Under IFRS, bond issuance costs, including the printing costs and legal fees associated with the issuance, should be:
expensed in the period when the debt is issued. recorded as a reduction in the carrying value of bonds payable.
accumulated in a deferred charge account and amortized over the life of the bonds.