In January 1 20x1 abc company issued a 1000000 10 year bond with a stated interest rate of 9% payable annually every December 31st the market interest rate is 7% the bonds price is 1140160. liability be on December31, 20X1?m) If they used straight-line amortization, whatwill be the balance of thediscount (or premium)after the last interestpayment is made?[Choose ]n) If they use straight line [Choose]amortization, what will bethe bond's net liabilityafter the last interestpayment and just beforethe bond is paid off?

The bonds are issued at premium when market rate is lower than the coupon rate of bonds payable. The…

Answered: In January 1 20x1 abc company issued a…

In January 1 20x1 abc company issued a 1000000 10 year bond with a stated interest rate of 9% payable annually every December 31st the market interest rate is 7% the bonds price is 1140160.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 11MC: When a bond sells at a discount, the carrying value ________ after each amortization entry. A....

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Question

In January 1 20x1 abc company issued a 1000000 10 year bond with a stated interest rate of 9% payable annually every December 31st the market interest rate is 7% the bonds price is 1140160.

liability be on December
31, 20X1?
m) If they used straight-
line amortization, what
will be the balance of the
discount (or premium)
after the last interest
payment is made?
[Choose ]
n) If they use straight line [Choose]
amortization, what will be
the bond's net liability
after the last interest
payment and just before
the bond is paid off?

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

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