Both the straight-line method and the effective-interest method of amortization will always result in the same...
Both the straight-line method and the effective-interest method of amortization will always result in
| the same amount of interest expense being recognized each year. |
| the same carrying value each year during the term of the bonds. |
| more interest expense being recognized than if premium or discounts were not amortized. |
| the same amount of interest expense being recognized over the term of the bonds. |
Homework Answers
| Option D is the answer | ||
|
The same amount of Interest expense will be recognized over the term of bond if either straight line method is used or effective interest method is used. Comment if you face any issues |
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Both the straight-line method and the effective-interest method
of amortization will always result in
the same...
36. If bonds are issued initially at a premium and the effective-interest method of amortization is...
36. If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be A) greater than if the straight-line method were used. B) greater than the amount of the interest payments. C) the same as if the straight-line method were used. D) less than if the straight-line method were used. 37. Stockholders' equity is generally classified into two major categories: A) contributed capital and appropriated capital. B) appropriated...
if bonds are issued initially at a premium and the effective interest method of amortization is...
if bonds are issued initially at a premium and the effective interest method of amortization is used, interest expense in the earlier years will be a. greater than if th straight line methid werr used b. greater than if the amount of interst payments c. the same as if the straight line method were used d. less than if the straight line method were used for extra point, please support your answer.
Which of the following statements regarding the amortization of discounts and premiums on bonds is true?...
Which of the following statements regarding the amortization of discounts and premiums on bonds is true? The effective interest method applies a non-constant percentage to the bond carrying value to compute interest expense. The amount of interest expense decreases each period over the life of a discounted bond issue when the effective interest method is used. When the straight-line and effective interest methods of amortization result in interest that is materially different, GAAP requires use of the effective interest method....
Exercise 10-9 Straight Line l: Amortization Exercise 10-9 Straight-Line: Amortization of bond premium LO P3 Quatro...
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Exercise 10-9 Straight-Line: Amortization of bond premium LO P3 Quatro Co. issues bonds dated January 1, 2019, with a par value of $700,000. The bonds' annual contract rate is 13%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%, and the bonds are sold for $717,237. 1. What is the amount of the premium on...
Journal Entries Amortization Schedule Straight-Line Amortization Effective Interest Option #1: Investments in Debt Securities Complete the...
Journal Entries
Amortization Schedule Straight-Line
Amortization Effective Interest
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Which of the following statements regarding the amortization of discounts and premiums on bonds is false?...
Which of the following statements regarding the amortization of discounts and premiums on bonds is false? Group of answer choices a. Over the life of the bond, the carrying value increases for discounted bonds when using the effective interest method. b. When the straight-line and effective interest methods of amortization result in interest that is materially different, GAAP requires use of the effective interest method. c. The amount of interest expense increases each period over the life of a discounted...
When bonds are sold at a premium, if the annual straight-line amortization amount is compared to...
When bonds are sold at a premium, if the annual straight-line amortization amount is compared to the annual effective interest amortization amount over the life of the bond issue, the annual amount of the straight-line amortization of premium is: Multiple Choice Higher than the effective interest amount in the early years and less than the effective interest amount in the later years. Higher than the effective interest amount every year. Less than the effective interest amount in the early years...
The effective-interest method of bond amortization finds the difference between the ________ times the ________ and...
The effective-interest method of bond amortization finds the difference between the ________ times the ________ and the ________ times the ________. stated interest rate, principal, stated interest rate, carrying value stated interest rate, principal, market interest rate, carrying value stated interest rate, carrying value, market interest rate, principal market interest rate, carrying value, market interest rate, principal The International Financial Reporting Standards require the use of ________. any method of amortization of bond premiums the straight-line method of amortization of...
Bond Amortization = Bond Discount or Premium / Number of Interest Periods Interest Paid = Face...
Bond Amortization = Bond Discount or Premium / Number of Interest Periods Interest Paid = Face Amount of Bonds x Stated Interest Rate Interest Expense = Interest Paid + Discount ( or – Premium) Amortization On October 1, 2018 ABC issued 5%, 10-year bonds with a face value of $4,000,000 at 104. Interest is paid on October 1 and April 1, with any premiums or discounts amortized on a straight-line basis. What is interest expense for 2018? Assume ABC Company...
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Entries for Issuing Bonds and Amortizing Premium by Straight-Line Method Daan Corporation wholesales repair products to equipment manufacturers. On April 1, 2016, Daan Corporation issued $4,600,000 of 5-year, 10% bonds at a market (effective) interest rate of 9%, receiving cash of $4,781,993. Interest is payable semiannually on April 1 and October 1. a. Journalize the entry to record the issuance of bonds on April 1, 2016. For a compound transaction, if an amount box does not require an entry, leave...
36. If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be A) greater than if the straight-line method were used. B) greater than the amount of the interest payments. C) the same as if the straight-line method were used. D) less than if the straight-line method were used. 37. Stockholders' equity is generally classified into two major categories: A) contributed capital and appropriated capital. B) appropriated...
Which of the following statements regarding the amortization of discounts and premiums on bonds is true? The effective interest method applies a non-constant percentage to the bond carrying value to compute interest expense. The amount of interest expense decreases each period over the life of a discounted bond issue when the effective interest method is used. When the straight-line and effective interest methods of amortization result in interest that is materially different, GAAP requires use of the effective interest method....
Exercise 10-9 Straight Line l: Amortization
Exercise 10-9 Straight-Line: Amortization of bond premium LO P3 Quatro Co. issues bonds dated January 1, 2019, with a par value of $700,000. The bonds' annual contract rate is 13%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%, and the bonds are sold for $717,237. 1. What is the amount of the premium on...
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Amortization Schedule Straight-Line
Amortization Effective Interest
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