bond contract rate =7% semi- anual bond -$10,000 bond market =6% semi annual bond life = 10 years 1) find the selling price of this bond 2) will it be sold at a discount or premium 3) do the journal entry for the issuance
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
bond contract rate =7% semi- anual
bond -$10,000
bond market =6% semi annual
bond life = 10 years
1) find the selling price of this bond
2) will it be sold at a discount or premium
3) do the
4) calculate the discount/premium authorization per period (use the slightline method )
5) do the entry for the payment of cash interest period
6) do the entry for the amortization of the discount /premium per period
7)find total interest expense per period
8) show the balance sheet presentation of the bond after two periods have elapsed
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