Assume bonds payable are amortized using the straight-line amortization method unless stated otherwise.Determining bond pricesBond prices depend on the market rate of interest, stated rate of interest, and time. Determine whether the following bonds payable will be issued at face value, at a premium, or at a discount:The market interest rate is 8%. Idaho issues bonds payable with a stated rate of 7.75%.Austin issued 9% bonds payable when the market interest rate was 8.25%.Cleveland’s Cars issued 10% bonds when the market interest rate was 10%.Atlanta’s Tourism issued bonds payable that pay the stated interest rate of 8.5%. At issuance, the market interest rate was 10.25%.

Answered: Assume bonds payable are amortized…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.3E: Issue Price The following terms relate to independent bond issues: 500 bonds; $1,000 face value; 8%...

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Assume bonds payable are amortized using the straight-line amortization method unless stated otherwise.

Determining bond prices

Bond prices depend on the market rate of interest, stated rate of interest, and time. Determine whether the following bonds payable will be issued at face value, at a premium, or at a discount:

The market interest rate is 8%. Idaho issues bonds payable with a stated rate of 7.75%.
Austin issued 9% bonds payable when the market interest rate was 8.25%.
Cleveland’s Cars issued 10% bonds when the market interest rate was 10%.
Atlanta’s Tourism issued bonds payable that pay the stated interest rate of 8.5%. At issuance, the market interest rate was 10.25%.

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