Trego Company issued, payable on 31 December, 2014, $10,000,000 face value, 4%, 5-year bonds. Interest will be paid semiannually each 30 June and 31 December. The bonds sold at a price of 102; Trego uses the straight-line method of amortizing bond discount or premium.
-The carrying value of this liability in Trego Company's 31 December, 2015, statement of financial position is:

Question

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The bonds were issued at a premium (102% of face value), so the initial carrying value is $10,200,000. The premium of $200,000 is amortized over 5 years (10 periods), resulting in $20,000 amortized per period. After two periods (one year), the carrying value is $10,200,000 - $40,000 = $10,160,000.

Trego Company Issued, Payable on 31 December, 2014, $10,000,000 Face