On November 1, 2015, Davis Company issued $30,000, ten-year, 7% bonds for $29,100. The bonds were dated November 1, 2015, and interest is payable each November 1 and May 1. Davis uses the straight-line method of amortization.
How much is the amount of discount amortization on each semi-annual interest date?

Question

Quizplus · Accepted Answer

The discount is $30,000 - $29,100 = $900.
The bonds have a 10-year term, or 20 semi-annual periods. Therefore, the semi-annual discount amortization is $900/20 = $45.

On November 1, 2015, Davis Company Issued $30,000, Ten-Year, 7