The company has issued a bond with a £20,000,000 par value. It has 4 year maturity with a coupon of 2% paid annually. The cost associated with issuing the bond is £95,000 and the market interest rate at the time of issue was 3.5%. The company’s reporting period is 1January to 31 December. With regards to the bond in situation 2, assuming the company chooses the effective interest rate method and the bond is issued on 1 January 2019: If a different company had issued the same bond but had chosen to record the bond at fair value, what would be the ending carrying amount in the financial statements year ending 31 Dec 2021 if the market interest rate was 4.5%?

The company has issued a bond with a £20,000,000 par value. It has 4 year maturity with a coupon of 2% paid annually. The cost associated with issuing the bond is £95,000 and the market interest rate at the time of issue was 3.5%. The company’s reporting period is 1January to 31 December. With regards to the bond in situation 2, assuming the company chooses the effective interest rate method and the bond is issued on 1 January 2019: If a different company had issued the same bond but had chosen to record the bond at fair value, what would be the ending carrying amount in the financial statements year ending 31 Dec 2021 if the market interest rate was 4.5%?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 3EB: Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semiannual...

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