Bonds: Bonds are financial instrument, generally issued to raise a large amount of debt with an assurance to repay the sum with applicable interest. Straight Line Method : In straight line method, discount or premium of bonds is assigned in even portion to the interest expense till the date of maturity of bonds. Effective Interest Method: In effective interest method, sum total of interest expense is allocated in such a way so as to yield a constant rate of interest. The interest expense reduces every accounting period with the reduction in book value of bonds. To explain: Allocation of interest expense that yields a constant rate of interest over a bond’s life.

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Answer 1

Question

Chapter 10, Problem 8DQ

To determine

Bonds:

Bonds are financial instrument, generally issued to raise a large amount of debt with an assurance to repay the sum with applicable interest.

Straight Line Method:

In straight line method, discount or premium of bonds is assigned in even portion to the interest expense till the date of maturity of bonds.

Effective Interest Method:

In effective interest method, sum total of interest expense is allocated in such a way so as to yield a constant rate of interest. The interest expense reduces every accounting period with the reduction in book value of bonds.

To explain: Allocation of interest expense that yields a constant rate of interest over a bond’s life.

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Answer 2

Question

Chapter 10, Problem 8DQ

To determine

Bonds:

Bonds are financial instrument, generally issued to raise a large amount of debt with an assurance to repay the sum with applicable interest.

Straight Line Method:

In straight line method, discount or premium of bonds is assigned in even portion to the interest expense till the date of maturity of bonds.

Effective Interest Method:

In effective interest method, sum total of interest expense is allocated in such a way so as to yield a constant rate of interest. The interest expense reduces every accounting period with the reduction in book value of bonds.

To explain: Allocation of interest expense that yields a constant rate of interest over a bond’s life.

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Answer 3

Question

Chapter 10, Problem 8DQ

To determine

Bonds:

Bonds are financial instrument, generally issued to raise a large amount of debt with an assurance to repay the sum with applicable interest.

Straight Line Method:

In straight line method, discount or premium of bonds is assigned in even portion to the interest expense till the date of maturity of bonds.

Effective Interest Method:

In effective interest method, sum total of interest expense is allocated in such a way so as to yield a constant rate of interest. The interest expense reduces every accounting period with the reduction in book value of bonds.

To explain: Allocation of interest expense that yields a constant rate of interest over a bond’s life.

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Answer 4

Question

Chapter 10, Problem 8DQ

To determine

Bonds:

Bonds are financial instrument, generally issued to raise a large amount of debt with an assurance to repay the sum with applicable interest.

Straight Line Method:

In straight line method, discount or premium of bonds is assigned in even portion to the interest expense till the date of maturity of bonds.

Effective Interest Method:

In effective interest method, sum total of interest expense is allocated in such a way so as to yield a constant rate of interest. The interest expense reduces every accounting period with the reduction in book value of bonds.

To explain: Allocation of interest expense that yields a constant rate of interest over a bond’s life.

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Answer 5

Chapter 10, Problem 8DQ

To determine

Bonds:

Bonds are financial instrument, generally issued to raise a large amount of debt with an assurance to repay the sum with applicable interest.

Straight Line Method:

In straight line method, discount or premium of bonds is assigned in even portion to the interest expense till the date of maturity of bonds.

Effective Interest Method:

In effective interest method, sum total of interest expense is allocated in such a way so as to yield a constant rate of interest. The interest expense reduces every accounting period with the reduction in book value of bonds.

To explain: Allocation of interest expense that yields a constant rate of interest over a bond’s life.

Answer 6

Chapter 10, Problem 8DQ

To determine

Bonds:

Bonds are financial instrument, generally issued to raise a large amount of debt with an assurance to repay the sum with applicable interest.

Straight Line Method:

In straight line method, discount or premium of bonds is assigned in even portion to the interest expense till the date of maturity of bonds.

Effective Interest Method:

In effective interest method, sum total of interest expense is allocated in such a way so as to yield a constant rate of interest. The interest expense reduces every accounting period with the reduction in book value of bonds.

To explain: Allocation of interest expense that yields a constant rate of interest over a bond’s life.

Answer 7

Chapter 10, Problem 8DQ

To determine

Bonds:

Bonds are financial instrument, generally issued to raise a large amount of debt with an assurance to repay the sum with applicable interest.

Straight Line Method:

In straight line method, discount or premium of bonds is assigned in even portion to the interest expense till the date of maturity of bonds.

Effective Interest Method:

In effective interest method, sum total of interest expense is allocated in such a way so as to yield a constant rate of interest. The interest expense reduces every accounting period with the reduction in book value of bonds.

To explain: Allocation of interest expense that yields a constant rate of interest over a bond’s life.

Answer 8

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Answer 9

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Answer 11

Ch. 10 - Prob. 1MCQ Ch. 10 - Prob. 2MCQ Ch. 10 - Prob. 3MCQ Ch. 10 - Prob. 4MCQ Ch. 10 - Prob. 5MCQ Ch. 10 - Prob. 1DQ Ch. 10 - Prob. 2DQ Ch. 10 - Prob. 3DQ Ch. 10 - Prob. 4DQ Ch. 10 - Prob. 5DQ

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