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WEEK 11. EXERCISE 1 st july 2007 PT Cahaya purchases Rp 50.000.000,- of 8% bonds of PT.DITHO due in 8 years and 9 months later. The purchase price is.

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Presentation on theme: "WEEK 11. EXERCISE 1 st july 2007 PT Cahaya purchases Rp 50.000.000,- of 8% bonds of PT.DITHO due in 8 years and 9 months later. The purchase price is."— Presentation transcript:

1 WEEK 11

2 EXERCISE 1 st july 2007 PT Cahaya purchases Rp ,- of 8% bonds of PT.DITHO due in 8 years and 9 months later. The purchase price is Rp plus interest accrued that paid on 1 st april and 1 st of October. On 30 th June 2014 PT Cahaya sell that bonds on Rp ,- Required questions: 1. Calculate bonds’ cost 2. Calculate interest accrued 3. Journals to record all transactions

3 BASIC CONCEPT Long-term investment is INVESTMENT TO OTHER COMPANIES FOR MORE THAN ONE ACCOUNTING PERIOD ( > 1 YEAR)

4 LONG TERM INVESTMENT A DEBT INVESTMENT IN WHICH INVESTOR LOANS MONEY TO ENTITY AT A DEFINE PERIOD OF TIME GAINING INTEREST RATE BONDS SECURITY THAT SIGNIFIES OWNERSHIP IN A CORPORATION AND REPRESENT A CLAIM ON CORPORATION’S ASSET & EARNING GAINING DIVIDEN SHARE / STOCK

5 PURPOSES GAINING ADDITIONAL REVENUE GAINING ADDITIONAL REVENUE BUILDING A NETWORK WITH CLIENTS / OTHER CORPORATIONS CONTROLLING OTHER COMPANIES

6 ACCOUNTING FOR LONG-TERM INVESTMENT LONG-TERM INVESTMENT IS RECORDED BASED ON ITS COST FOR BOTH BONDS AND SHARE HOW TO CALCULATE IT?

7 TYPES OF BONDS secured / unsecured bonds : mortgage bonds, debenture Term bonds & Serial Bonds Convertible bonds & callable bonds

8 COST FACE AMOUNT / NOMINAL VALU DIFFERENCE PREMIUM (AGIO)/ DISCOUNT ( DISAGIO) AMORTIZED BASED ON THE USEFUL LIFE AMOTIZATION IS CALCULATED ON THE END OF ACCOUNTING PERIOD

9 EXAMPLE 1 MAY 2004 PT. FIA BOUGHT BONDS OF PT XYZ WITH A NOMINAL VALUE OF RP ; / BOND AT 105% PLUS A BROKERAGE FEE RP ,. BONDS’ INTEREST RATE WAS 12%. INTEREST IS PAID ON 1/3 – 1/9. BONDS USEFUL LIFE WAS 5 YEARS. Calculate: 1. Cost 2. Accrued interest 3. Journals 4. Adjustment journal at 31 December

10 TGLKETERANGANDEBITKREDIT 1 MAYINVEST ON BOND (PT.FIA) INTEREST REVENUE CASH ; SeptCASH INTEREST REVENUE ; DecINTEREST RECEIVABLE INTEREST REVENUE ; INTEREST REVENUE INVESTMENT ON BOND (PT.FIA) (TO RECORD AMORTIZED OF PREMIUM) ;

11 SELLING BONDS BEFORE MATURITY 1. CALCULATE BONDS’ MARKET PRICE AND ADDITIONAL COS 2. CALCULATE CARRYING AMOUNT OF BONDS INVESTMENT 3. DIFFERENTS: (1) VS (2) = PROFIT/LOSS ON BONDS SELLING CA = COST – PREMIUM /AGIO THAT HAS BEEN AMOTIZED CA = COST + DISCOUNT / DISAGIO HAS NOT BEEN AMOTIZED YET PROFIT IF : (1) > (2) LOSS IF : (1) < (2)

12 EXAMPLE 1 OCT 2006 PT. FIA SOLD PT XYZ’S BONDS WITH A NOMINAL VALUE OF RP ; AT 110%. ITS BONDS INTEREST WAS 12%. SELLING FEE WAS RP ; HARGA KURS : 110% X ;RP ; BIAYA PENJUALANRP ; HARGA JUAL STL BIAYA PENJUALANRP ; HARGA PROLEHANRP ; AMORTISASI AGIO : TH 2004RP ; TH 2005RP ; TH 2006RP ; RP ; NILAI BUKU OBLIGASIRP ; RUGI PENJUALAN OBLIGASIRP ; HARGA KURS : 110% X ;RP ; BIAYA PENJUALANRP ; HARGA JUAL STL BIAYA PENJUALANRP ; HARGA PROLEHANRP ; AMORTISASI AGIO : TH 2004RP ; TH 2005RP ; TH 2006RP ; RP ; NILAI BUKU OBLIGASIRP ; RUGI PENJUALAN OBLIGASIRP ; + KURS VALUE: 110% X ;RP ; SELLING FEERP ; MARKET PRICERP ; COST VALUE OF BONDSRP ; PREMIUM’S AMOTIZATION: 2004RP ; 2005RP ; 2006RP ; RP ; CARRYINGAMOUNTRP ; LOSS OF BONDS SELLINGRP ;

13 BONDS INTEREST: (1/12 X12/100) X RP ; = ; 01 OCTOBER 2006 : CASHRP ; LOSS ON BONDS SELLINGRP ; INVESTMENT ON BONDS (PT.FIA)RP ; INTEREST REVENUERP ;


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