amortizing bond
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter11: Notes, Bonds, And Leases
Section: Chapter Questions
Problem 3Q
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Concept explainers
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:
Question
. Which of the following are true for a bond maturing on a single date when the effective interest method of amortizing bond discount is used?
a. interest expense as a percentage of the bond’s carrying amount varies from period to period
b. interest expense increases each six-month period
c. interest expense remains constant each six-month period
d. effective interest rate is used to compute for the periodic interest
a. interest expense as a percentage of the bond’s carrying amount varies from period to period
b. interest expense increases each six-month period
c. interest expense remains constant each six-month period
d. effective interest rate is used to compute for the periodic interest
a and b
c and d
a and d
b and c
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