FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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The total interest expense over the entire life of a bond is equal to the sum of the interest payments plus the total discount or minus the total premium related to the bond.
True
False
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- ushaarrow_forwardWhen determining the amount of interest to be paid on a bond, which of the following information is not necessary? a. The length of the interest period, annually or semiannually b. The face rate of interest on the bonds c. The face amount of the bonds d. The selling price of the bondsarrow_forwardIn theory (disregarding any other marketplace variables), the proceeds from the sale of a bond will be equal to The face amount of the bond plus the present value of the interest payments made during the life of the bond. The sum of the face amount of the bond and the periodic interest payments The face amount of the bond The present value of the bond maturity value plus the present value of the interest payments to be made during the life of the bond.arrow_forward
- When a company uses the the effective-interest method to amortize a bond discount amortization, the interest expense is equal to a) the market rate multiplied by the beginning-of-period carrying amount of the bonds. b) the market rate of interest multiplied by the face value of the bonds. c) the stated rate multiplied by the beginning-of-period carrying amount of the bonds. d) the stated (nominal) rate of interest multiplied by the face value of the bonds.arrow_forward22.The market price of a bond issued at a discount is the present value of its principal amount at the market (effective) rate of interest a. minus the present value of all future interest payment at the market (effective) rate of interest. b. plus the present value of all future interest payments at the market (effective) rate of interest. c. plus the present value of all future interest payments at the rate of interest stated on the bond. d. minus the present value of all future interest payments at the rate of interest stated on the bond. For your answer, enter either a or b or c or d. Group of answer choices b a c darrow_forwardAt a bond's maturity, the bond issuer pays the bondholder the par value of the bond. True or False True Falsearrow_forward
- A bond that has only one payment, which occurs at maturity, defines which one of these types of bonds?arrow_forward22) The effective interest rate method of amortizing bonds allocates the same amount of interest expense to each period. TRUE FALSEarrow_forward6. When is interest expense more than interest paid? a. when bonds are sold at a premiumb. when bonds are sold at parc. when bonds are sold at a discountd. when bonds are sold at a yieldarrow_forward
- dons premium or discount refer to the interest rate, higher of lower than what? or does it refer to the value of the bondarrow_forward11. Under the straight-line amortization method, interest expense on a bond sold at a premium is equal to the a. interest paid plus bond premium amortizationb. interest rate times the book value of the bondsc. interest rate times the face value of the bondsd. interest paid minus bond premium amortizationarrow_forwardThe Discount on Bonds Payable account is O A contra expense O A liability O An expense O A contra liabilityarrow_forward
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