212. Presented here is a partial amortization schedule for Courtney Company who sold €500,000, five year 10% bonds on January 1, 2013 for €520,000 and uses annual straight-line amortization. Which of the following amounts should be shown in cell (i)?

Question

Quizplus · Accepted Answer

Cell (i) represents the annual amortization amount, which is calculated by dividing the premium of €20,000 by the five-year life of the bond, resulting in an annual amortization amount of €4,000. Since the company is using straight-line amortization, the annual amortization amount remains constant throughout the life of the bond, so cell (i) should show €4,000 for each year. Therefore, the correct answer is choice C, €50,000, which represents the total annual amortization amount for the five-year life of the bond.