Question

Riedy purchased (on 7/1/21) $1,000,000 of HTM, 8% bonds for $904,000. The bonds mature on January...

Riedy purchased (on 7/1/21) $1,000,000 of HTM, 8% bonds for $904,000. The bonds mature on January 1, 2029; Straight-line amortization is used. The 12/31/22 bond carrying value is:

Select one:

a. $910,400

b. $916,800

c. $910,000

d. $923,200

e. $897,600

Under the equity method of accounting for equity investments, an investor decreases the amount of the investment account based on the:

Select one:

a. Investor recording a decrease in market value of the investee's shares

b. Investee receiving a dividend

c. Investee paying dividends

d. Earnings reported by the investee in its financial statements

Business   Accounting   
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Answer #1
Q1.
Total Discount (1000,000-904000) 96000
Divide: Periods 15
Discount amortized each period 6400
Period expired till Dec31 2022 3
Discount amortized till Dec31, 2022 19200
Unamortized discount on Dec31, 2022 76800
Carrying value of bonds:
Par value of bonds 10,00,000
Less: Unamortized discount 76,800
Carrying value of bonds: 9,23,200
Answer is d. $ 923,200
Q2.
Answer is C. Investee paying dividends.
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