Agee Technology, Inc., issued 9% bonds, dated January 1, with a face amount of $
ID: 2478648 • Letter: A
Question
Agee Technology, Inc., issued 9% bonds, dated January 1, with a face amount of $1,280 million on July 1, 2016, at a price of $1,260 million. For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31.
What would be the amount(s) related to the bonds that Agee would report in its statement of cash flows for the year ended December 31, 2016, if it uses the indirect method? (List any cash outflows with a minus sign. Enter your answer in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)
There are three blanks
What would be the amount(s) related to the bonds that Agee would report in its statement of cash flows for the year ended December 31, 2016, if it uses the indirect method? (List any cash outflows with a minus sign. Enter your answer in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)
There are three blanks
Explanation / Answer
Solution:
The amount to be shown in Statement of Cashflows under financing activities is the amount , Agee Technology received from its issue, i.e., $ 1,260 millions. Similarly amount of interest will also appear in cash flow statement, which is - 9 % * $ 1,280 millions = $ 115.20 million.