On January 1, 2014, ¥3,000,000,000, 10-year, 10% bonds, were issued for $2,910,000,000. Interest is paid annually on January 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the monthly amortization amount is

Question

Quizplus · Accepted Answer

The total discount on the bonds is ¥3,000,000,000 - ¥2,910,000,000 = ¥90,000,000. Over 10 years, this is ¥90,000,000 / 10 = ¥9,000,000 per year. Dividing by 12 months gives a monthly amortization of ¥750,000.

On January 1, 2014, ¥3,000,000,000, 10-Year, 10% Bonds, Were Issued