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Bond issuance costs are recorded as a reduction of the
carrying value of the debt under GAAP but are recorded as an asset
and amortized to expense over the term of the debt under IFRS.
10) On January 1, Patterson Inc. issued $5,000,000, 9% bonds for
$4,695,000. The market rate of interest for these bonds is 10%.
Interest is payable annually on December 31. Patterson uses the
effectiveinterest method of amortizing bond discount. At the end of the
first year, Patterson should report bonds payable of:
11) On January 1, Martinez Inc. issued $3,000,000, 11% bonds for
$3,195,000. The market rate of interest for these bonds is 10%.
Interest is payable annually on December 31. Martinez uses the
effectiveinterest method of amortizing bond premium. At the end of
the first year, Martinez should report bonds payable of:
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ACC 304 Week 9 Chapter 13 and Chapter 14
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