The effective interest rate method of amortizing bonds allocates the same amount of interest expense to each period.
Q: When the effective-interest method is used to amortize bond premium or discount, the periodic…
A: Solution Concept If the coupon rate of bond is greater than the market rate of interest , bond is…
Q: The printing costs and legal fees associated with the issuance of bonds should Select one: a. be…
A: As per IFRS 9 and IAS 39, bonds issuance costs shall be accounted for as a reduction from the issue…
Q: In what ways do bonds amortize their discount and premium? Each one is explained in detail.
A: Solution concept Discount and premium bond When the coupon rate of interest is greater…
Q: Which of the following is correct? a. The terms, “yield rate”, “ stated rate”, and “market rate”…
A: Bonds are Debt instruments issued by Corporate to investors to raise funds. Stated Rate of Bond…
Q: Compare the two commonly used methods of determining interest on bonds.
A:
Q: The face value of a bond is O a. The amount payable at the maturity date. O b. The amount used to…
A: Face Value of Bond The face value or face amount of a bond payable is the amount printed on the…
Q: When the bond interest rate > the market rate, the bonds are issued at a discount. Select one: O…
A: Bond issued has fixed percentage of interest rate which is payable by bond issuer to bond holder.…
Q: Bond issuance costs must be reported separately as deferred charges and charged to expense over the…
A: The costs associated with issuing the bonds are known as bond issue costs. Example - Legal fees,…
Q: Serial bonds are a. Bonds backed by collateral.b. Bonds that mature in installments.c. Bonds the…
A: Bonds: These are the corporate debt units that a company issues and securitizes as tradeable assets.…
Q: The Excel formula to compute the accrued days in PH Bonds
A: The excel formula to calculate the accrued days is DAYS360.
Q: The total interest expense over the entire life of a bond is equal to the sum of the interest…
A: Bonds are issued by the company because it is it cheaper source of finance. It is because the…
Q: According to the PFRS, discount or premium on bonds payable may be amortized using the straight-line…
A: The given statement is True.. According to the PFRS, discount or premium on bonds payable may be…
Q: When bonds are issued at a premium, what happens to the carrying value and interest expense each…
A: Issuance of bonds at premium means cash received on the issue is more than the par value of the…
Q: Define the following Bond related terms: Issue Date Face Amount Term Contract Rate Payment Frequency…
A: Bonds refers to the security issued by corporate companies or government as and when they need to…
Q: Explain Bonds Issued Between Interest Dates.
A: Bond: It can be defined as the instrument that carries a fixed rate of income and represents the…
Q: Determine the estimated amount payable to the holder of the bonds.
A: This question is related to the liquidation of the company. The process of closing a firm and…
Q: 16. Under the straight-line amortization method, interest expense on a bond sold at a premium is…
A: Bonds are a type of borrowings made by the business, on which periodic interest payment needs to be…
Q: When bonds are issued at a discount, the interest expense for the period is A. The amount of…
A: Discount occurs when the market value of bond is lower than the stated value.it is amortized during…
Q: what is the principal amount repaid at the maturity of a bond is called?
A: Bond is a debt instrument which is issued by corporates or governments to raise funds for any…
Q: If the straight-line method of amortization of bond premium or discount is used, which of the…
A: Bond premium or discount arises at the time of issue of issue can be amortized by the two popular…
Q: the effective interest rate method of amortizing bonds allocates the same amount of interest expense…
A: Solution- The preferred method for amortizing (or gradually writing off) a discounted bond is the…
Q: In computing the carrying amount of a bond, unamortized _______ is added to the face value of the…
A: Solution:- Introduction:- A bond is a financial instrument.Borrowers issue bonds to raise money from…
Q: When bonds are issued at a premium and the effective interest method is used for amortization, at…
A: When bonds are issued at a premium and the effective interest method is used for amortization, at…
Q: The amount loaned when a bond is issued is a. the principal. b. the dividend. c. its maturity.…
A: The amount loaned when a bond is issued is the principal.
Q: Bond issue costs a. should be amortized by the straight-line method to interest expense b. should…
A: 16 (a) should be amortized by the straight-line method to interest expense
Q: Under the effective interest method of bond discount or premium amortization, the periodic interest…
A: For the purpose of running the operations of the company, the company's will issue financial…
Q: The effective interest method of amortizing bonds allocates the same amount of expense to each…
A: In an accounting practice, the effective interest method is used to discount a bond. If the bonds…
Q: If bonds are redeemed on maturity date, any premium or discount a. Is carried forward and…
A: When bonds are issued at premium or discount, its discount or premium will be amortized over the…
Q: When bonds are issued at a discount and the effective interest method is used for amortization, at…
A: Effective interest method If bond is issued at discount and effective interest method is used for…
Q: nds are the bonds which are redeemed after fixed no. of years. T/F?
A: Bonds refer to a fixed-income instruments issued by companies to the investors. Bonds act as a debt…
Q: Amortizing the discount and premium on bonds is done in two ways. Describe each one.
A: Amortization means the reduction in the amount of liability due to write offs over a regular period.
Q: A serial bond repayment plan involves a(n) Group of answer choices A. series of installments to…
A: Bond involves both interest and principal payment.
Q: Under the effective-interest method of bond discount or premium amortization, the periodic interest…
A: Solution Concept Under the effective interest method , the bond is recognized using the…
Q: When bonds are retired at maturity, ________. A. the carrying value always equals the face value…
A: Concept used:
Q: Calculate the accrued interest (in $) and the total proceeds (in $) of the bond sale. (Round
A: Bond is an instrument that carries fixed coupon payment with them. These are issued to those…
Q: Explain the concept of accrued interest on bonds at the end of an accounting period.
A:
Q: Please read and respond to the three questions below. 1. Under what conditions of bond issuance…
A: 1. State the conditions of bond issuance does a discount on bonds payable arise: Identify the…
Q: When the effective-interest method of bond discount amortization is used, the carrying value of the…
A: Introduction: Bond discount: When the bond issued for less than face value called as bond discount.
Q: What are the reasons that some bonds are issued at adiscount and others are issued at a premium?
A: The term premium and discount, which are used in context of bones, they usually tells that how the…
Q: Bond premium should be reported in the statement of financial position A. at the present value of…
A: Solution:- Introduction:- Bond premium means investors are willing to pay more than the face value…
Q: There are certain patterns we should expect to see on a bond amortization table. Complete the…
A: a. bonds interest expense when issued at premium is cash interest expense minus the premium. So,…
Step by step
Solved in 2 steps
- The effective-interest method of bond amortization finds the difference between the ________ times the ________ and the ________ times the ________. A. stated interest rate, principal, stated interest rate, carrying value B. stated interest rate, principal, market interest rate, carrying value C. stated interest rate, carrying value, market interest rate, principal D. market interest rate, carrying value, market interest rate, principalthe effective interest rate method of amortizing bonds allocates the same amount of interest expense to each periodWhen the effective-interest method is used, the amount of bond discount amortized eachinterest period is equal to thea. amount of interest expense less the cash paid for interest.b. amount of interest expense plus the cash paid for interest.c. face value of the bond times the market interest rate at the date of issue.d. face value of the bond times the stated interest rate.
- Explain how each of the columns in an amortization schedule is calculated, assuming the bonds are issued at a discount. How is the amortization schedule different if bonds are issued at a premium?Assuming the bonds are issued at a discount, explain how each column in an amortization schedule is determined. When bonds are issued at a premium, how does the amortization schedule differ?When bonds are issued at a discount, the interest expense for the period is A. The amount of interest payment for the period minus the discount amortization for the period B. The amount of interest payment for the period plus the discount amortization for the period. C. The amount of interest payment for the period minus the premium amortization for the period D. The amount of interest payment for the period plus the premium amortization for the period.
- When a company uses the the effective-interest method to amortize a bond discount amortization, the interest expense is equal to a) the market rate multiplied by the beginning-of-period carrying amount of the bonds. b) the market rate of interest multiplied by the face value of the bonds. c) the stated rate multiplied by the beginning-of-period carrying amount of the bonds. d) the stated (nominal) rate of interest multiplied by the face value of the bonds.If the straight-line method of amortization of bond premium or discount is used, which of the following statements is true? Group of answer choices Total interest expense will increase over the life of the bonds with the amortization of bond discount. Total interest expense will increase over the life of the bonds with the amortization of bond premium. Total interest expense will decrease over the life of the bonds with the amortization of bond discount. Total interest expense will remain the same over the life of the bonds with the amortization of bond discount.If bonds are issued at a discount and the effective-interest method is used, the amount ofinterest expensea. remains the same over the term of the bonds.b. is less than the cash interest payment.c. increases each period as the bonds approach maturity.d. decreases each period as the bonds approach maturity
- When the effective interest rate method is used, the amortization of the bond premiumThe PFRS allows for the straight-line amortization of discount or premium on bonds due.16. Under the straight-line amortization method, interest expense on a bond sold at a premium is equal to the a. interest paid plus bond premium amortizationb. interest rate times the book value of the bondsc. interest rate times the face value of the bondsd. interest paid minus bond premium amortization