SOLUTION: MMU Company Bond Investments & Equipment Issues Case Study

Hey buddy, Kindly have a look at the paper and get back to us in case of any clarification needed. If a revision is needed, kindly do not hesitate to request for the same. I am committed to ensuring you get quality and satisfactory work. Thank You! 😎1The Issues in the Case about the Company’s Bond Investments and EquipmentAuthor’s NameInstitution AffiliationCourseProfessor’s Name8th February 20212Issue 1: BondsBonds refer to a category of loan issued to a huge organization, such as a city, acompany, or a government. Based on the bond type, the organization might be required to paythe loaning party interest on the issued loan and eventually return the principal amount at thematurity date. Therefore, bonds are treated as a low-risk investment, as the principal amount isreturned to the bondholder once the bond matures. It is important to remember that bondshave an initial sale value known as face value, an interest rate known as coupon rate, and atermination date known as the maturity date.In the case of Virtually Perfect Corporation, the company had initially acquired itsbond on 1st July 2012 with a maturity value of $400,000 and a coupon rate of 10%. Thebond’s interest was paid semiannually on 1 st July and 1st January. Ideally, the bond wassupposed to mature on 1 st July 2020. According to the company, the bond was classified asamortized cost investment because it was supposed to be held to maturity. However, it isimportant to understand that when bonds are included on a balance sheet, they often act asloans and should be considered liabilities. On the Virtually Perfect Corporation’s balancesheet, the bond has been classified as amortized costs investment and included as an asset,while it is supposed to appear as a liability. Bonds appearing on the liability side are oftenbalanced out by the equipment purchased, which appear on the assets si…

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