When should a company record the amortization ofbond issuance costs under financial accountingstandards?a) Immediately upon bond issuanceb) At bond maturity date onlyc) Over the life of bonds using effective interestmethodd) When bonds are called or retired

Explanation of Bond Issuance Costs: Bond issuance costs are the expenses directly associated with…

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Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 14GI

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The journal entry a company records for the payment of interest, interest expense, and amortization of bond discount is
How would the balance of the discount on bonds payable account usually be reported in the balance sheet? Current Assets section Current Liabilities section Long-Term Liabilities section Investments section
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The journal entry a company makes for the payment of interest, interest expense, and amortization of bond premium is a.debit Interest Expense, credit Cash and Premium on Bonds Payable b.debit Interest Expense, credit Cash c.debit Interest Expense and Premium on Bonds Payable, credit Cash d.debit Interest Expense, credit Interest Payable and Premium on Bonds Payable
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The journal entry a company makes for the issuance of bonds when the contract rate is less than the market rate would be Oa. debit Cash and Discount on Bonds Payable, credit Bonds Payable Ob. debit Cash, credit Bonds Payable Oc. debit Cash, credit Premium on Bonds Payable and Bonds Payable Od. debit Bonds Payable, credit Cash
The printing costs and legal fees associated with the issuance of bonds should Select one: a. be expensed when incurred. O b. be reported as a deduction from the face amount of bonds payable. c. not be reported as an expense until the period the bonds mature or are retired. d. be recorded as a reduction of the bond issue amount and then amortized over the life of the bonds.
Under IFRS, bond issuance costs, including the printing costs and legal fees associated with the issuance, should be:(a) expensed in the period when the debt is issued.(b) recorded as a reduction in the carrying value of bonds payable.(c) accumulated in a deferred charge account and amortized over the life of the bonds.(d) reported as an expense in the period the bonds mature or are redeemed.
Bond issue costs, such as printing fees, legal fees, commissions, etc. are most appropriately accounted for by a. charging them to an expense account in the year the bonds are actually sold. b. debiting them to unamortized bond issue costs, setting them as a deferred charge on the statement of financial position, and amortizing them in a manner similar to bond discount over the life of the bond. c. charging them to an expense account in the year the bonds are originally dated whether or not they are sold in that year. d. considering them in the measurement of the bonds payable.
When using the effective−interest amortization method for bonds, the amount of the interest expense is calculated using the carrying amount of the bonds and the ________________________. A. market value B. original cost C. market interest rate D. stated interest rate
Classifying Liability-Related Accounts into Balance Sheet or Income StatementIndicate the proper financial statement classification (balance sheet or income statement) for each of the following liability-related accounts. Account Financial Statement a. Gain on Bond Retirement b. Discount on Bonds Payable c. Mortgage Notes Payable d. Bonds Payable e. Bond Interest Expense f. Bond Interest Payable (due next period) g. Premium on Bonds Payable h. Loss on Bond Retirement
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When should a company record the amortization of bond issuance costs under financial accounting standards? a) Immediately upon bond issuance b) At bond maturity date only c) Over the life of bonds using effective interest method d) When bonds are called or retired