On January 1, Year 1, Victor Company issued bonds with a $600,000 face value, a stated rate of interest of 6%, and a 5-year term to maturity. The bonds sold at 96. Interest is payable in cash on December 31 of each year. Victor uses the straight-line method to amortize bond discounts and premiums. What is the carrying value of the bond liability at December 31, Year 3?

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The carrying value of the bond liability at December 31, Year 3 is $590,400. The bond was issued at a discount of $24,000 ($600,000 x 96% - $600,000). The discount is amortized over the life of the bond using the straight-line method, which means that $4,800 of the discount is amortized each year ($24,000 / 5 years). Therefore, the carrying value of the bond liability at December 31, Year 3 is $590,400 ($600,000 - $4,800 x 3).

On January 1, Year 1, Victor Company Issued Bonds with a $600,000