Determine the premium expense to be reported in the income
statement and the estimated liability for premiums on the balance
sheet for 2010 and 2011.
Question 4. (TCO D) On January 1, 2011, Piper Co. issued 10-year
bonds with a face value of $1,000,000 and a stated interest rate of
10%, payable semiannually on June 30 and December 31. The
bonds were sold to yield 12%. Table values are:
Present value of 1 for 10 periods at 10%
.386
Present value of 1 for 10 periods at 12%
.322
Present value of 1 for 20 periods at 5%
.377
Present value of 1 for 20 periods at 6%
.312
Present value of annuity for 10 periods at 10%
6.145
Present value of annuity for 10 periods at 12%
5.650
Present value of annuity for 20 periods at 5%
12.462
Present value of annuity for 20 periods at 6%
11.470