ER issued for $2,060,000, two thousand of its 9%, $1,000 callable bonds.The bonds are dated January 1, 2019, and mature many years from now.Interest is payable semi-annually on January 1 and July 1.The bonds can be called by the issuer at $102 on any interest payment date after December 31, 2023.The unamortized bond premium was
$28,000 at December 31, 2021, and the market price of the bonds was $99 on this date.In its December 31, 2021, balance sheet, at what amount should GC report the carrying value of the bonds?
A)$2,028,000
B)$2,040,000
C)$2,032,000
D)$1,980,000
E)Cannot answer; the bond term is not given

Question

Quizplus · Accepted Answer

The carrying value of the bonds is the face value plus the unamortized premium. The face value is $2,000,000 (2,000 bonds x $1,000 each), and the unamortized premium is $28,000. Therefore, the carrying value is $2,000,000 + $28,000 = $2,028,000.

ER Issued for $2,060,000, Two Thousand of Its 9%, $1,000