Comparing Carrying Value and Market Value
Direct TV is the largest provider of direct-to-home digital television services and the second largest provider in the multichannel video programming distribution industry in the United States. They provide over 16 million subscribers with access to hundreds of channels of digital-quality video pictures % and CD-quality audio programming that they transmit directly to subscribers’ homes via high-powered geosynchronous satellites. The company’s annual report contained the following note:
Long-Term Debt
The unamortized bond premium included in total debt for the current year was $2.8 million and $3.1 million for the prior year.
Required:
Explain why the unamortized premium is included in total debt and why the premium decreased in amount from one year to the next.
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