The Ness Company Sells $5,000,000 of Five-Year,10% Bonds at the Start

question 4

Multiple Choice

The Ness Company sells $5,000,000 of five-year,10% bonds at the start of the year.The bonds have an effective yield of 9%.Present value factors are below: $$\begin{array} { l c c } & \underline { \mathbf { 1 0 } \% } & \underline { \mathbf { 9 \% } } \\\text { PV \$1 factor 1 year } & 0.90909 & 0.91743 \\\text { PV \$1 factor 2 years } & 0.82645 & 0.84168 \\\text { PV \$1 factor 3 years } & 0.75131 & 0.77218 \\\text { PV \$1 factor 4 years } & 0.68301 & 0.70843 \\\text { PV \$1 factor 5 years } & 0.62092 & 0.64993\end{array}$$
The amount of cash interest paid in Year 1 on the bonds is

• A)$450,000.
• B)$467,503.
• C)$500,000.
• D)$538,895.

Identify and apply the equity method of accounting for investments in associates, including recognizing the investor's share of profits and losses.

Understand the journal entries required to record the acquisition, dividends received, and the revaluation of investments.

Distinguish between different methods of accounting for investments and the scenarios in which they are applied.

Understand the impact of dividends paid by the investee on the investment's carrying value.

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Definitions:

Decrease

A reduction in quantity, size, or intensity of a specific variable or entity.

Quantity Supplied

The quantity of a product or service that suppliers are ready to offer for sale at a certain price during a defined time frame.

Quantity Demanded

Quantity demanded is the total amount of a good or service that consumers are willing and able to purchase at a specific price level, at a given time.

Equilibrium

A state in which market supply and demand balance each other, resulting in stable prices and quantities.