On January 1, a company issued a $500,000, 10%, 8-year bond payable, and received proceeds of $487,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The amount of discount amortized each period is $812.50.
($500,000 - $487,000)/16 = $812.50

Question

Quizplus · Accepted Answer

The calculation shown is correct, and the amount of discount amortized each period is indeed $812.50. Therefore, the statement is true.

On January 1, a Company Issued a $500,000, 10%, 8-Year