Debond Corp. issues £1,000,000 worth of fi ve-year bonds, dated 1 January 2010, whenthe market interest rate on bonds of comparable risk and terms is 6 percent. Th e bondspay 5 percent interest annually on 31 December. What are the sales proceeds of thebonds when issued, and how is the issuance refl ected in the fi nancial statements?
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Debond Corp. issues £1,000,000 worth of fi ve-year bonds, dated 1 January 2010, when
the market interest rate on bonds of comparable risk and terms is 6 percent. Th e bonds
pay 5 percent interest annually on 31 December. What are the sales proceeds of the
bonds when issued, and how is the issuance refl ected in the fi nancial statements?
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- Debond Corp. issues £1,000,000 face value of fi ve-year bonds, dated 1 January 2010,when the market interest rate is 6 percent. Th e sales proceeds are £957,876. Th e bondspay 5 percent interest annually on 31 December.1 . What is the interest payment on the bonds each year?2 . What amount of interest expense on the bonds would be reported in 2010 and 2011using the eff ective interest rate method?3 . Determine the reported value of the bonds (i.e., the carrying amount) at 31 December 2010 and 2011, assuming the eff ective interest rate method is used to amortisethe discount.4 . What amount of interest expense on the bonds would be reported under thestraight-line method of amortising the discount?Prembond Corp. issues £1,000,000 face value of fi ve-year bonds, dated 1 January 2010,when the market interest rate is 4 percent. Th e sales proceeds are £1,044,518. Th e bondspay 5 percent interest annually on 31 December.1 . What is the interest payment on the bonds each year?2 . What amount of interest expense on the bonds would be reported in 2010 and 2011using the eff ective interest rate method?3 . Determine the reported value of the bonds (i.e., the carrying amount) at 31 December2010 and 2011, assuming the eff ective interest rate method is used to amortise thepremium.On January 1, 2018, Wawatosa Inc. issued 7-year bonds with a face value of $100,000 and a stated interest rate of 10% payable semi-annually on July 1 and January 1. The bonds were sold to yield 8%. A. Assuming the bonds were sold at 104.732, what is the selling price of the bonds? $fill in the blank 1 B. Were they issued at a discount or a premium?
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