ed at maturity, the bondholders are paid the face value plus the unamortized premium or less the unamortized discount. the entry to retire the bonds may include a gain or loss on retirement of bonds. the carrying value always equals the face value. the carrying value equals the face value plus the unamortized premium or less the unamortized discount.

ed at maturity, the bondholders are paid the face value plus the unamortized premium or less the unamortized discount. the entry to retire the bonds may include a gain or loss on retirement of bonds. the carrying value always equals the face value. the carrying value equals the face value plus the unamortized premium or less the unamortized discount.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 11MC: When a bond sells at a discount, the carrying value ________ after each amortization entry. A....

See similar textbooks

Similar questions

When a bond sells at a discount, the carrying value ________ after each amortization entry. A. increases B. decreases C. stays the same D. cannot be determined
When bonds are retired at maturity, ________. A. the carrying value always equals the face value B. the carrying value equals the face value plus the unamortized premium or less the unamortized discount C. the bondholders are paid the face value plus the unamortized premium or less the unamortized discount D. the entry to retire the bonds may include a gain or loss on retirement of bonds
If the straight-line method of amortization of bond premium or discount is used, which of the following statements is true? Group of answer choices Total interest expense will increase over the life of the bonds with the amortization of bond discount. Total interest expense will increase over the life of the bonds with the amortization of bond premium. Total interest expense will decrease over the life of the bonds with the amortization of bond discount. Total interest expense will remain the same over the life of the bonds with the amortization of bond discount.
When bonds are issued at a premium and the effective interest method is used for amortization, at each subsequent interest payment date, the cash paid is: Select one: a. Less than the interest expense b. Equal to the interest expense c. Greater than the interest expense d. More than if the bonds had been sold at a discount e. Less than if the bonds had been sold at a discount
When bonds are issued at a premium and the effective interest method is used for amortization, at each successive interest payment date, the interest expense: Select one: a. Is equal to the change in market value of the bonds b. Decreases c. Stays the same d. Increases e. Is equal to the change in carrying value of the bonds
If bonds are redeemed on maturity date, any premium or discount a. Is carried forward and written off in the same manner as that used prior to the maturity date. b. Should be used to calculate the gain or loss resulting from the maturity of the bonds. c. Should be written off directly to a bond retirement account as the bond will be redeemed. d. Will be fully amortized as its amortization period is designed to coincide with the life of the bond issue.
Zopf Company sells its bonds at a premium and applies the effective-interest method in amortizing the premium. Will the annual interest expense increase or decrease over the life of the bonds? Explain.
In theory, the proceeds from the sale of a bond will equal to the face amount of the bond. present value of the principal amount due at the end of the life of the bond plus the present value of the interest payments made during the life of the bond plus transaction costs. face amount of the bond plus the present value of the interest payments during the life of the bond. present value of the principal amount due at the end of the life of the bond plus the present value of the interest payments made during the life of the bond.
When bonds are issued at a premium, what happens to the carrying value and interest expense each period over the life of the bonds? a. Carrying value and interest expense increase.b. Carrying value and interest expense decrease.c. Carrying value decreases and interest expense increases.d. Carrying value increases and interest expense decreases.
Explain how each of the columns in an amortization schedule is calculated, assuming the bonds are issued at a discount. How is the amortization schedule different if bonds are issued at a premium?
The market price of a bond issued at a discount is the present value of its principal amount at the market (effective) rate of interest a. Less the present value of all future interest payments at the rate of interest stated on the bond. b. Plus the present value of all future interest payments at the rate of interest stated on the bond. c. Plus the present value of all future interest payments at the market (effective) rate of interest. d. Less the present value of all future interest payments at the market (effective) rate of interest.
There are certain patterns we should expect to see on a bond amortization table. Complete the following statements regarding these patterns. Item Statements A. Assuming a term bond is issued at a premium, the cash interest payment calculated every period should: B. Assuming a term bond is issued at a premium, the interest expense amount calculated every period using the effective interest method should be C. Assuming a term bond is issued at a premium, the carrying value over time should be D. Assuming a term bond is issued at either a premium or a discount, the carrying value on the issuance date should be equal to the bond's