On January 1, 2016, Action Corporation Issued a Two-Year, 5

question 47

Essay

On January 1, 2016, Action Corporation issued a two-year, 5%, $1,000 bond payable. Beginning in 2017, interest is payable every January 1 over the life of the bond. The market rate of interest on January 1, 2016 is 3%. Calculate the present value of the bond issued by Action on January 1, 2016.

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Definitions:

Paid-In Capital in Excess of Par

The amount received by a company from selling its shares above their par value.

Organizational Expenses

Costs incurred during the formation of a corporation or organization, such as legal fees and registration charges.

Corporate Form

A legal structure for a business recognized as a separate legal entity from its owners, offering liability protection but with specific tax obligations.

Major Policy Decisions

Key strategic decisions made by a company's management or board of directors that affect the overall direction and policies of the organization.