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Company H issues a $20,000,000 bond on January 1, 2020 with a coupon rate of 9%.  The present value of the bond is $20,811,010 and the market rate of interest was 8%.  The bond has a 5-year life and will make semiannual interest payments and will use the straight line amortization method. A) Is the bond issued at a face value, a discount, or premium? B) What is the amount of the semi-annual interest payments? C) What is the amount that will be recorded to interest expense each time an interest payment is made? D) What is the carrying value of the bond on December 31, 2021?

Company H issues a $20,000,000 bond on January 1, 2020 with a coupon rate of 9%.  The present value of the bond is $20,811,010 and the market rate of interest was 8%.  The bond has a 5-year life and will make semiannual interest payments and will use the straight line amortization method. A) Is the bond issued at a face value, a discount, or premium? B) What is the amount of the semi-annual interest payments? C) What is the amount that will be recorded to interest expense each time an interest payment is made? D) What is the carrying value of the bond on December 31, 2021?

Financial Accounting: The Impact on Decision Makers
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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Company H issues a $20,000,000 bond on January 1, 2020 with a coupon rate of 9%.  The present value of the bond is $20,811,010 and the market rate of interest was 8%.  The bond has a 5-year life and will make semiannual interest payments and will use the straight line amortization method.

A) Is the bond issued at a face value, a discount, or premium?

B) What is the amount of the semi-annual interest payments?

C) What is the amount that will be recorded to interest expense each time an interest payment is made?

D) What is the carrying value of the bond on December 31, 2021?

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