A company has a December 31 fiscal year-end. If the interest is paid annually on December 31, the bond interest expense on the income statement is the amount of the interest cash payment when the bond initially sells at par value.

Question

Quizplus · Accepted Answer

When a bond is issued at par value, the interest expense recorded on the income statement equals the cash interest payment, as there is no premium or discount to amortize.

A Company Has a December 31 Fiscal Year-End