Dart Company issued $600,000 of 8%, 5-year bonds at 105, with interest paid annually.Assuming straight-line amortization, what is the carrying value of the bonds after one year?

Question

Quizplus · Accepted Answer

The premium paid for the bonds is $600,000 x 105% = $630,000. Straight-line amortization per year is ($630,000 - $600,000)/5 years = $6,000. Thus, after one year, the carrying value of the bond is $630,000 - $6,000 = $624,000. Therefore, the correct answer is C.

Dart Company Issued $600,000 of 8%, 5-Year Bonds at 105