6. Which of the following is correct about the effective-interest method of amortization? a. The effective...
6. Which of the following is correct about the effective-interest method of amortization?
a. The effective interest method applied to investments in debt
securities is different from
that applied to bonds payable.
b. Amortization of a discount decreases from period to
period.
c. Amortization of a premium decreases from period to period.
d. The effective-interest method produces a constant rate of return
on the book value of
the investment from period to period.
Homework Answers
The correct statement about the effective interest method of amortization is
Option d. The effective interest method produces a constant rate of return on the book value of the investment from period to period.
Add Answer to:
6. Which of the following is correct about the
effective-interest method of amortization?
a. The effective...
6. Which of the following is correct about the effective-interest method of amortization? a. The effective...
6. Which of the following is correct about the effective-interest method of amortization? a. The effective interest method applied to investments in debt securities is different from that applied to bonds payable. b. Amortization of a discount decreases from period to period. c. Amortization of a premium decreases from period to period. d. The effective-interest method produces a constant rate of return on the book value of the investment from period to period.
9) Under the effective-interest method of amortization, the cash payment on each interest pas date will:...
9) Under the effective-interest method of amortization, the cash payment on each interest pas date will: A) remain the same for each interest period B) decrease if bonds are issued at a premium C) increase if bonds are issued at par D) increase if bonds are issued at a discount 10) Current liabilities fall into two categories, which are referred to as: A) contra liabilities and contingent liabilities B) contingent liabilities and non contingent liabilities C) liabilities of a known...
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...
Dl credit to interest Expense 9) Under the effective interest method of amortization the cash samment...
Dl credit to interest Expense 9) Under the effective interest method of amortization the cash samment on A C ntheforchrest period si decrease if bands are issued at a premium crease beds are med at par increase bends data 10) Current abilities fall into two categories which are referred to as A) contra labies and contingent liabilities B) contenties and non contingent l es Clities of a known amount and lateswho t ube be of known amount and contingent es...
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
Option #1: Investments in Debt Securities Complete the following questions. In addition to answering the items below, you must submit an analysis of the assignment. Analyze the specific outcomes and write an analysis directed toward the team at BAJA Corporation describing what the numbers mean and how they relate to the business. Submit journal entries in the Excel file included in the module section and written segments in an MS Word document....
C) debit to interest Expense D) credit to Interest Expense 9) Under the effective-interest method of...
C) debit to interest Expense D) credit to Interest Expense 9) Under the effective-interest method of amortization, the cash payment on each interest paymer date will: A) remain the same for each interest period B) decrease if bonds are issued at a premium C) increase if bonds are issued at par D) increase if bonds are issued at a discount 10) Current liabilities fall into two categories, which are referred to as: A) contra liabilities and contingent liabilities B) contingent...
Effective Interest Amortization On December 31, Caper, Inc., issued $250,000 of eight percent, ten-year bonds for...
Effective Interest Amortization On December 31, Caper, Inc., issued $250,000 of eight percent, ten-year bonds for $218,844, yielding an effective interest rate of ten percent. Semiannual interest is payable on June 30 and December 31 each year. The firm uses the effective interest method to amortize the discount. Required Prepare an amortization schedule showing the necessary information for the first two interest periods. Round amounts to the nearest dollar. Balance Book Value Perlodic of Unamortized of Bonds Interest Interest Interest...
please note it is the second interest payment using the wffective interest method of amortization. On...
please note it is the second interest payment using the
wffective interest method of amortization.
On January 1, a company issues bonds dated January 1 with a par value of $400,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $383,793. The journal entry to record the second interest payment using the effective interest method of...
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....
When the effective interest method is used, the amortization of the bond premium 0 has no...
When the effective interest method is used, the amortization of the bond premium 0 has no effect on the interest expense in any period O decreases interest expense each period Oincreases interest expense each period 0 increases interest expense in some periods and decreases interest expense in other periods
9) Under the effective-interest method of amortization, the cash payment on each interest pas date will: A) remain the same for each interest period B) decrease if bonds are issued at a premium C) increase if bonds are issued at par D) increase if bonds are issued at a discount 10) Current liabilities fall into two categories, which are referred to as: A) contra liabilities and contingent liabilities B) contingent liabilities and non contingent liabilities C) liabilities of a known...
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...
Dl credit to interest Expense 9) Under the effective interest method of amortization the cash samment on A C ntheforchrest period si decrease if bands are issued at a premium crease beds are med at par increase bends data 10) Current abilities fall into two categories which are referred to as A) contra labies and contingent liabilities B) contenties and non contingent l es Clities of a known amount and lateswho t ube be of known amount and contingent es...
Journal Entries
Amortization Schedule Straight-Line
Amortization Effective Interest
Option #1: Investments in Debt Securities Complete the following questions. In addition to answering the items below, you must submit an analysis of the assignment. Analyze the specific outcomes and write an analysis directed toward the team at BAJA Corporation describing what the numbers mean and how they relate to the business. Submit journal entries in the Excel file included in the module section and written segments in an MS Word document....
C) debit to interest Expense D) credit to Interest Expense 9) Under the effective-interest method of amortization, the cash payment on each interest paymer date will: A) remain the same for each interest period B) decrease if bonds are issued at a premium C) increase if bonds are issued at par D) increase if bonds are issued at a discount 10) Current liabilities fall into two categories, which are referred to as: A) contra liabilities and contingent liabilities B) contingent...
Effective Interest Amortization On December 31, Caper, Inc., issued $250,000 of eight percent, ten-year bonds for $218,844, yielding an effective interest rate of ten percent. Semiannual interest is payable on June 30 and December 31 each year. The firm uses the effective interest method to amortize the discount. Required Prepare an amortization schedule showing the necessary information for the first two interest periods. Round amounts to the nearest dollar. Balance Book Value Perlodic of Unamortized of Bonds Interest Interest Interest...
please note it is the second interest payment using the
wffective interest method of amortization.
On January 1, a company issues bonds dated January 1 with a par value of $400,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $383,793. The journal entry to record the second interest payment using the effective interest method of...
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....
When the effective interest method is used, the amortization of the bond premium 0 has no effect on the interest expense in any period O decreases interest expense each period Oincreases interest expense each period 0 increases interest expense in some periods and decreases interest expense in other periods
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