Use the present value and future value tables included in Appendix 8 and on the textbook companion website.
-When a company issues bonds, how are unamortized bond discounts and premiums classified on the balance sheet?

Question

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. 
-When a company issues bonds, how are unamortized bond discounts and premiums classified on the balance sheet?

Quizplus · Accepted Answer

Bond premiums are added to the face value of bonds as a liability, while bond discounts are deducted from the face value of bonds as a liability. Therefore, bond premiums are classified as additions to, and bond discounts are classified as deductions from, the face value of bonds. Choice A is incorrect because bond discounts are not assets, but rather a reduction of a liability. Choice B is incorrect because bond discounts and premiums are not considered expenses or revenues. Choice D is incorrect because the correct answer is C.

Use the Present Value and Future Value Tables Included in Appendix