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ACC - Now that the current liabilities have been completed for the audit

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Now that the current liabilities have been completed for the audit, the audit senior has asked you to review the long-term liabilities for any potential issues. After reviewing the long-term liability documents, you noticed the following potential issues need to be addressed;? On January 1, 2008, Hogg issued $10,000,000 in 20-year, 7-percent bonds at 97 that were not recorded. Interest was paid semiannually on July 1 and January 1.;? Hogg purchased new equipment by issuing a five-year zero-interest-bearing note, with a face value of $1,000,000. Hogg?s typical rate of borrowing for these notes is 5 percent. The note and the equipment were recorded at face value.;? Hogg currently owns 30 percent of Piggy Company and is considering buying the additional 21 percent to get control of the company. However, Piggy Company has a considerable amount of debt on their books with an 80 percent debt-to-asset (DTA) ratio.;Write a half-page report to the ownership of Hogg with your recommendation regarding the purchase of Piggy Company. Be sure to support your position.;In addition, you will deal with Hogg?s issuance of bonds by preparing all necessary schedules and journal entries related to the issuance and first-year accounting for the bonds.;Also, analyze and record the issuance of a note exchanged for property. Explore the potential of off-balance-sheet debt and update the log of issues to include this week?s topics.

 

Paper#80322 | Written in 18-Jul-2015

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