Chapter 14, Problem 4QC

To determine

Bonds:

• Bonds are long term negotiable instruments of debt issued by corporate entities to secure funds from the public.

• These funds are used to either fund long term capital expenditure or similar long term investment opportunities.

• Bonds represent steady income for the investor in the form of periodic interest payments by the entity issuing the bond.

• Bonds are issued at par (at face value), at premium (at higher than face value) or at a discount (at lower than face value).

• Interest expense for the bonds is calculated on the face value of the bonds payable. The frequency of the interest payments is pre-determined and can be annual, semi-annual, quarterly etc.

• Discount on issue of bonds is amortized in the same frequency of the interest payments i.e. Semi Annual , Annual Payments.

Interest expense for each year