On January 1,2015,Anthony Corporation issued $800,000 of 6%,5-year bonds at 98,with interest paid annually.Using the straight-line amortization method,what is the carrying value of the bonds one year later on January 1,2016?

Question

Quizplus · Accepted Answer

Using the straight-line method, the bond discount of $800,000 - ($800,000 x 98%) = $16,000 will be amortized over 5 years, which means an annual amortization of $16,000 ÷ 5 = $3,200.

After one year, the accumulated amortization will be $3,200, and the carrying value of the bond will be $784,000 ($800,000 - $16,000 amortization). Therefore, the answer is (C) $787,200.

On January 1,2015,Anthony Corporation Issued $800,000 of 6%,5-Year Bonds at 98,with