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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 13, Problem 7Q
Textbook Problem
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In the amortization table, how is the amortization of discount of premium computed?

To determine

Concept introduction:

Bonds:

are defined as debt instruments which are usually issued by the company that borrows to its lenders. They are issued at a rate of interest that is specified and for a specified period of time. The bondholders receive a fixed rate of interest on the bonds and the repayment of the bonds is made at the maturity date.

Amortization of Bonds discount or premium:

The Bonds can be issued at a discount or premium. The discount or premium on issue of bonds or the life of bonds is amortized using the effective rate methods or the straight line method.

To indicate:

The Calculation of the amortization of premium or discount in the amortization table.

Explanation of Solution

Bonds may be issued at a premium or discount. The premium or discount on issue of bonds is amortized or the life of bonds using the straight line or effective rate methods.

The Four Columns of the amortization table can be seen in the table below:

Amortization Table
Cash Interest Paid Bo...

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Chapter 13 Solutions

Principles of Accounting Volume 1
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