Videos
Sub Part-1
Bonds Issuance:
The Bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.
The Total amount of premium on bonds issuance.
Sub Part-2
Total interest expense over the life of bonds:
The total interest expense over the life off bonds can be computed by the adding up the all the amount paid over the lifetime of the bonds i.e. cash interest payment and maturity value of bonds and then the amount borrowed at the time of issuance of bonds shall be deducted from the above computed amount to arrive at the amount of total interest expense over the life of the bonds.
The Total interest expenses over the life of bonds.
Sub Part-3
Straight line Amortization of Premium:
The Straight line amortization of Premium is a technique of writing off the total discount over a period of bonds with an equal amount on each interest period. This equal amount can be computed by dividing the total amount of discount by the number of interest periods over a life of bonds.
Amortization table:
The amortization table under
The Preparation of amortization schedule.
Want to see the full answer?
Check out a sample textbook solution
Chapter 14 Solutions
FUNDAMENTAL ACCOUNTING PRINCIPLES
- ??!!arrow_forwardOlivia, single and age 58, sold her home for $485,000 after living there for 10 years. Her selling expenses were $9,000 and her adjusted basis in the home was $200,000. What is the maximum gain that Olivia must report in connection with the sale of her principal residence? a) $26,000 b) $0 c) $285,000 d) $276,000arrow_forwardBrightCo has a net income of $5.4 million and 2 million common shares outstanding. Each share is currently trading at $27 in the stock market. What is BrightCo's current EPS and P/E ratio?arrow_forward
- Nonearrow_forwardMiller Manufacturing, which produces a single product, has provided the following data for its most recent month of operations: • Number of units produced: 1,200 • Variable costs per unit: o Direct materials: $60 о Direct labor: $50 • о Variable manufacturing overhead: $9 Variable selling and administrative expense: $10 Fixed costs: о Fixed manufacturing overhead: $48,000 。 Fixed selling and administrative expense: $84,000 There were no beginning or ending inventories. The absorption costing unit product cost was: a) $172 per unit b) $230 per unit c) $119 per unit d) $159 per unitarrow_forwardStep by step answerarrow_forward
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education