On April 1, 2020, Boston Company issued at 99 plus accrued interest 2,000 of 8% P1,000 face value bonds. The bands are dated January 1, 2020 and will mature on Jan. 1, 2030 and pay interest on January 1, and July 1. The entity paid bond issue cost of P70,000. Requirements: 1. How much was the bond premium OR discount on April 1, 2020? 2. Using the straight line method of amortization, what is the carrying amount of the bond on December 31, 2020?
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
On April 1, 2020, Boston Company issued at 99 plus accrued interest 2,000 of 8% P1,000 face
Requirements:
1. How much was the bond premium OR discount on April 1, 2020?
2. Using the straight line method of amortization, what is the carrying amount of the bond on December 31, 2020?
Step by step
Solved in 3 steps
