A company issued 7%, 5-year bonds with a par value of $900,000. The market rate when the bonds were issued was 7.5%. The company received $885,000 cash for the bonds. What is the amount of interest expense for the first semiannual interest period?
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Ответ:
$33,000
Explanation:
The bond is issued on discount when the bond issuance proceeds are less than the face value of the bond. The discount is expensed over the bond period until maturity. It is added to the interest expense value to expense it.
Discount on the bond = Face value - cash proceeds = $900,000 - $885,00 = $15,000
According to straight line amortization
Discount charged in the period = $15,000 / 5 = $3,000 per year = $1,500 per six months
Cash payment of interest = $900,000 x 7% = $63,000 per year = $31,500 per six months
Total Interest Expense = $31,500 + $1,500 = $33,000
Ответ:
and good sells men maybe