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Question of the Week - Financial Reporting

exam_whizexam_whiz IllinoisPosts: 68 Sr Associate
edited May 2014 in Level 1 Questions
Security Solutions Corp has an outstanding bond obligation on their balance sheet with a carrying value of $275,000. The bond was issued 5 years ago, and has since lost significant value due to increasing interest rates. The company intends to re-purchase the bond for $250,000. Which of the following statements accurately portrays the transaction that will be recorded to demonstrate the redemption?

Question of the Week - Financial Reporting 42 votes

Under GAAP, the company will recognize $25,000 in income but will need to write down the costs of issuing the debt as a separate transaction.
52%
ZeehairyfairyBrentSchneiderNaidenBRoyDProsper0jbrisbanemaboi_1danhavingabgrizzaneeshRubenSteven_ElseroadrsparksTannorjmsatchwelljak5189simply_complex2rachelmabrahmb2 22 votes
Under GAAP, the company will recognize $25,000 in income and will not need to make an adjustment for issuance costs as they are already capitalized within the book value of the bond.
33%
mbnmichael17khanmmuaHmelendeznar_bsoaSkefler57dlarsen843chmpnarcherTeemotoonervashannondailythendry7maxwellbastienroverfanclubknarf1 14 votes
Under IFRS, the company will recognize $25,000 in income and will need to write down the costs of issuing the debt as a separate transaction.
14%
tusharShiggkabobseanpintoamgbattThomasWrdx 6 votes

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