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Zepler [3.9K]
3 years ago
11

Crawford Inc. has bonds outstanding during a year in which the general (risk-free) rate of interest has risen. Crawford elected

the fair value option for the bonds upon issuance. What will the company report for the bonds in its income statement for the year? Multiple Choice Interest expense and a gain. Interest expense and a loss. A gain and no interest expense. Interest expense and no gain or loss.
Business
1 answer:
kiruha [24]3 years ago
7 0

Answer:

Interest expense and a gain.

Explanation:

US GAAP allows companies to report their financial assets or financial liabilities at their fair market value, this is called the fair value option.

If interest rates increase, and of course the coupon rate is fixed, then they value of bonds will decrease. The same logic applies to bonds sold at a discount.

In this case, the company must report an interest expense in the income statement regardless of what happens to the interest rate, since the company must pay the coupon rate.

Since the price of the bonds decreased, then the company's liabilities (bonds payable) decrease, so the company must report a gain = bond's previous value - bond's current value

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Investor Palmer has a diversified portfolio consisting of equity and debt valued at $365,000 at the start of the year. During th
garri49 [273]

Answer:

The return after taxes is 7.9%

Explanation:

At the start of the year the portfolio is valued at $365,000.

At the end, his portfolio has returns by dividends ($3,579), interests ($2,783) and portolio's valuation (389,648-365,000=$24,648).

The tax is applied to the dividends and interests, as:

Tax = 0.35 * (3579+2783) = 0.35*6362 = $2,226.70

We can then calculate the investor's return as

R = profit after taxes / initial portfolio valuation

R = ((3579 + 2783 - 2226.70)+24648)/365000

R= 28,783.30 / 365,000 = 0.079 = 7.9%

5 0
3 years ago
What is a shared risk pool in an annuity?​
ycow [4]

Risk pooling allows an insurance carrier to provide an income stream via an immediate annuity, even with its costs and expenses, far more cheaply than a person could on his or her own. Risk pooling is the practice of sharing all risks among a group of insurance companies.

7 0
2 years ago
World Company expects to operate at 80% of its productive capacity of 50,000 units per month. At this planned level, the company
slega [8]

Answer:

Following are the solution to this question:

Explanation:

Please find the complete question in the attachment file.

                              Applied to fixed overhead

Overhead fixed by DL hr.         =\frac{50000}{25000}\ \ \ \ \ \ \ \ \ \ \ =2

DL hours standard   =35000 \times \frac{25000}{50000 \times 80\%}  \ \ \ \ \ \ \ \ \ \ \ \ =21875

Application of fixed overhead = 21875 \times 2.0 \ \ \ \ \ \ \ \ \ \ = 43750

                                 Variance in volume

Application of total fixed overhead  = \$43,750

Fixed total estimates Superfast  =\$50,000  

Variance of volume  = \$6,250

5 0
2 years ago
Variable and Absorption Costing-Service Company Jensen's Tailoring provides custom tailoring services. After the company's first
loris [4]

Answer:

124

Explanation:

Yes

5 0
3 years ago
How many different ways are there to buy 8 fruits when the choices are apples, pears, and oranges?
Nadya [2.5K]

The total different ways are 65536.

How many ways can you buy 8 fruit?

8 choices from 4 options with repetition, so the number of ways is (8+4 − 1 4 − 1 ) = (11 3 ) = 165.

<h3>What is the rule of permutation and combination?</h3>

If the order doesn't matter then we have a combination, if the order do matter then we have a permutation.

One could say that a permutation is an ordered combination.

The number of permutations of n objects taken r at a time is determined by the following formula: P(n,r)=n!.

Learn more about permutation and combination here:

<h3>brainly.com/question/2790592</h3><h3 /><h3>#SPJ4</h3>

8 0
1 year ago
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