Bond discount should be presented in the financial statement of the issuer as a(

Question

Bond discount should be presented in the financial statement of the issuer as a(n) adjunet liability Contra liability Deferred charge Contra asset The market price of a bond issued at a discount is the present value of its principal amount at the market (effective) rate of interest. Plus he present value of all future interest payments at the market (effective) rate of interest. Plus the present value of all future interest payments at the rate of interest stated on the bond. Minus the present value of all future interest payments at the market (effective) rate of interest. Minus the present value of all future interest payments at the rate of interest stated on the bond. When bonds are retired prior to maturity, gain or loss from the early extinguishment of debt, should be Amortized over the remaining original life of the retired bond issue. Recognized as an extraordinary item in the period of extinguishment. Amortized over the life of the new bond issue. Bond usually sell at a premium When the market rate of interest is greater that the started rate of interest on the bonds When the started rate of interest on the bonds is greater that the market rate of interest. When the price of the bonds are greater that their maturity value . In none of these cases

Explanation / Answer

10. Statement that interest expense as percentage of book value varies from period to period is True.

Thus answer will be (a).

11. Bond discount should be presented as contra charge thus answer will be C.

12. Market value of the bond will be the aggregate of P.V of its principal amount and P.V of interest payments at the rate of interest stated at the bond. Thus answer will be b.

13. Gain on retirement of bond should be recognised as income in the period of extinguishment.

Thus answer will be b.

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---