When determining the amount of interest to be paid on a bond, which of the following information is not necessary?
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| a. |
The length of the interest period, annually or semiannually
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| b. |
The face rate of interest on the bonds
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| c. |
The face amount of the bonds
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| d. |
The selling price of the bonds
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- Does issuing a bond at a discount increase or decrease interest expense over the life of the bond?How are the bonds issued, what is the appropriate journal entry? Provide example for issuing bonds. How do we determine the present value of a bond when market rate differs from its contract rate? How do we record the interest payment (provide examples for both premium and discount amortization), using the effective interest method? What is the difference between the effective interest method and the straight line method when amortizing either a discount or a premium? Cite and give credit to the author that you are citing.The printing costs and legal fees associated with the issuance of bonds should Select one: a. be expensed when incurred. O b. be reported as a deduction from the face amount of bonds payable. c. not be reported as an expense until the period the bonds mature or are retired. d. be recorded as a reduction of the bond issue amount and then amortized over the life of the bonds.
- Explain how each of the columns in an amortization schedule is calculated, assuming the bonds are issued at a discount. How is the amortization schedule different if bonds are issued at a premium?How do we compute for the Carrying Value beginning of a Bonds Payable? of a Notes Payable?Are there differences in the amortization table for Bonds Payable and Notes Payable? State the differences.How would the balance of the discount on bonds payable account usually be reported in the balance sheet? Current Assets section Current Liabilities section Long-Term Liabilities section Investments section
- To determine if a bond will be issued at a premium, discount, or face value, one must know which of the following pairs of information?a. The face value and the stated interest rate on the datethe bonds were issued.b. The face value and the market interest rate on the datethe bonds were issued.c. The stated interest rate and the market interest rate onthe date the bonds were issued.d. You can’t tell without having more information.What type of account is Premium on Bonds Payable? What is its normal balance? Is it added to or subtracted from the Bonds Payable account to determine the carrying amount?
