Chapter 14, Problem 14.8P

Bonds Sold between Interest Dates at a Discount, Bond Issue Costs, IFRS. Tyka Manufacturing Company an IFRS reporter, issued $900,000 par value. 5%. 5-year bonds dated January 1, 2018. The bonds pay interest semiannually each June 30 and December 31. Tyka received cash of $863,825 when the bonds were issued, excluding accrued interest and bond issue costs, on April 30, 2018, to yield an effective interest rate of 7.742%. Bond issue costs were $59,000.

Required

1. a. Discuss the treatment of bond issue costs under IFRS. What is the discount or premium on the bond?
2. b. Prepare an amortization table for the bond issue using the effective interest rate method.
3. c. Prepare the journal entries required on the date of issue and on the first two interest dates in 2018 of June 30 and December 31.