[WANNABE_CPA]

On jan 1 yr 2, OAK co issued 400 of 8% $1000 bonds @ 97 plus accrued interest.The bonds are dated Oct 1 yr 1 and mature on Oct 1 yr 11. Interest is payable semiannually on April1 and Oct . Accrued interest for period Oct 1 and Jan 1yr 2 amounted to $8000.

On Jan 1yr2, what amount should Oak report as Bonds payable, Net of discount?

Answer they say is – $388000

Please answer this question, i cant understand the answer doesnt match with the concept discussed in the book and lecture…or maybe i am wrong.

FAR – 68 🙁 Rematch 2/10/14

AUD – 2014

REG – 2014

FAR – 2014

FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[Iron_Victory]

The Bond payable account would be

400 bonds x $1,000 Face Value x .97 discount factor = $388,000

Seems Correct to me. Are you adding interest payable to the bond payable account?

AUD - (74),78
BEC - 85
FAR - 86
REG - 84

[Iron_Victory]

The Bond payable account would be

400 bonds x $1,000 Face Value x .97 discount factor = $388,000

Seems Correct to me. Are you adding interest payable to the bond payable account?

AUD - (74),78
BEC - 85
FAR - 86
REG - 84

[WANNABE_CPA]

Thanks i get it now…i was working it with the journal entry completely ignoring it asks about Bonds payable net of discount…

Sometimes i just get stuck with the easiest ever question…maybe its the stress of getting it done this time lol .

FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[WANNABE_CPA]

Thanks i get it now…i was working it with the journal entry completely ignoring it asks about Bonds payable net of discount…

Sometimes i just get stuck with the easiest ever question…maybe its the stress of getting it done this time lol .

FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[dab88]

Leer Corp.’s pretax income in the current year was $100,000. The temporary differences between amounts reported in the financial statements and the tax return are as follows:
•Depreciation in the financial statements was $8,000 more than tax depreciation.
•The equity method of accounting resulted in financial statement income of $35,000. A $25,000 dividend was received during the year, which is eligible for the 80% dividends-received deduction.

Leer’s effective income tax rate was 30%. In its current year income statement, Leer should report a cur­rent provision for income taxes of:

Incorrect A.
$26,400.

B.
$23,400.

C.
$21,900.

D.
$18,600.

You answered A. The correct answer is B.

The current provision for income taxes is simply the taxable income for the year multiplied by the tax rate for the year. Thus, we need to find the taxable income for the year.

Start with the pretax income of $100,000, and add $8,000 to it because tax depreciation expense was less than book depreciation. The $35,000 equity method income for financial accounting needs to be subtracted since it is not the taxed amount:
•$100,000 + $8,000 – $35,000 = $73,000

The dividends that are taxable are subject to a dividends-received deduction of 80%. Thus, only add in $5,000 of the dividends ($25,000 × 0.20 (1 − 0.80)), because the dividends, though taxable in part, are not financial accounting income when applying the equity method:
•$73,000 + $5,000 = $78,000

Thus, taxable income is $78,000 ($100,000 + $8,000 – $35,000 + $5,000) and the current income tax due is $23,400:
• $78,000 × 0.30 = $23,400
I think i'm miss reading the question because I thought when financial statement depreciation is more than the tax depreciation it is a tax asset. Can someone try and explain the answer better. I am confused.

[Author]

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