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5 The carrying amount of bonds payable in the prior year's Liabilities 315 5. / The carrying amount of bonds payable in the prior vears financial statements is P100,000. This year, the carrying amount of the same bond issuance is P102,000. Which of the following assumptions is least likely to be valid? a. The face amount of the bonds is P120,000. b. The bonds were issued at a discount of P20,000. C. The interest expense during the period is P10,000 while the interest payment is P12,000. d. Total interest expense over the term of the bonds will exceed total interest payments by P20,000. e. All of these are equally acceptable.

5 The carrying amount of bonds payable in the prior year's Liabilities 315 5. / The carrying amount of bonds payable in the prior vears financial statements is P100,000. This year, the carrying amount of the same bond issuance is P102,000. Which of the following assumptions is least likely to be valid? a. The face amount of the bonds is P120,000. b. The bonds were issued at a discount of P20,000. C. The interest expense during the period is P10,000 while the interest payment is P12,000. d. Total interest expense over the term of the bonds will exceed total interest payments by P20,000. e. All of these are equally acceptable.

EBK CFIN
EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter5: The Cost Of Money (interest Rates)
Section: Chapter Questions
Problem 11PROB
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5 The carrying amount of bonds payable in the prior year's Liabilities 315 5. / The carrying amount of bonds payable in the prior vears financial statements is P100,000. This year, the carrying amount of the same bond issuance is P102,000. Which of the following assumptions is least likely to be valid? a. The face amount of the bonds is P120,000. b. The bonds were issued at a discount of P20,000. C. The interest expense during the period is P10,000 while the interest payment is P12,000. d. Total interest expense over the term of the bonds will exceed total interest payments by P20,000. e. All of these are equally acceptable.
Transcribed Image Text:5 The carrying amount of bonds payable in the prior year's Liabilities 315 5. / The carrying amount of bonds payable in the prior vears financial statements is P100,000. This year, the carrying amount of the same bond issuance is P102,000. Which of the following assumptions is least likely to be valid? a. The face amount of the bonds is P120,000. b. The bonds were issued at a discount of P20,000. C. The interest expense during the period is P10,000 while the interest payment is P12,000. d. Total interest expense over the term of the bonds will exceed total interest payments by P20,000. e. All of these are equally acceptable.
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