The carrying amount of bonds issued at a discount is calculated by:
A)subtracting the sum of Discount on Bonds Payable and Interest Payable from Bonds Payable.
B)subtracting Discount on Bonds Payable from Bonds Payable.
C)subtracting Interest Expense from Bonds Payable.
D)subtracting Interest Payable from Bonds Payable.

Question

Quizplus · Accepted Answer

The carrying amount of bonds issued at a discount is calculated by subtracting the discount on bonds payable from bonds payable. This is because the discount represents the difference between the face value of the bond and the proceeds received by the issuer, and therefore must be deducted from the face value to arrive at the correct carrying amount. Interest payable and interest expense are not used in the calculation of the carrying amount of bonds.

The Carrying Amount of Bonds Issued at a Discount Is