A company issues $20,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2010.Interest is paid on June 30 and December 31.The proceeds from the bonds are $19,604,145.Using effective-interest amortization, what will the carrying value of the bonds be on the December 31, 2010 statement of financial position?

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Quizplus · Accepted Answer

The carrying value is calculated by adding the interest expense (calculated using the yield rate) to the initial carrying value and then subtracting the actual interest paid. This process is repeated for each interest period.

A Company Issues $20,000,000, 7