Bond discount amortization is the process through which bond discount is written off over the life of the bond. There are two primary methods of bond amortization: straight-line method and effective interest rate method.
The bond interest payment and amortization journal entry would be: AccountDrCr Interest expense $2,587,975 Bond premium (879,746/10) $87,975 Cash $2,500,000Bond Premium Amortization ScheduleUnder the effective interest method, bond premium amortization in each period is different. It is ...
Use the above straight-line bond amortization table and prepare journal entries for the following. (a)The issuance of bonds on January1. (b)The first interest payment on June30. (c)The second interest payment on December31. Journal ...
Bond discount amortization also helps adjust the discounted bond carrying value over time. Because bonds sold at a discount will be repaid at their full face value, total bond discount is added back to arrive at the bond face value. The adjustment is done periodically by adding the allocated a...
The amortization of a premium on bonds payable decreases bond interest expense. (a) True (b) False. The discount on bonds payable reduces interest expense on the income statement. True or False. Justify. The spreading of the discount over the life of...
e. Straight-line amortization is use A zero coupon bond sells for 351.98, Par Value = 1,000, Years to maturity = 20. What is YTM with semiannual compounding? A 15-year, 14% semiannual coupon bond with a par value of $1,000 may be called in 4 years ...