Effective interest amortization method
[DOC File]1._Some of the factors to be considered in determining ...
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Mar 17, 2010 · This price resulted in an effective-interest rate of 8% on the bonds. Atwater uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest July 1 and January 1. Hint: Prepare entries to record issuance of bonds, payment of interest, and amortization of bond premium using effective-interest method.
[DOC File]Practice Problem 2
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It was therefore designated by the APB as the preferred method of amortization. The straight-line method may be used if the interim results of using it do not differ materially from the resulting amortization using the effective-interest method. The total amortization will, of course, be the same under either method over the life of the bond. 12.
[DOC File]P14-5 (Comprehensive Bond Problem) In each of the ...
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Interest is payable on January 1 and July 1. Moore Corporation uses the straight-line method of amortization. The amount of interest expense recorded on July 1, 2000, is: a. $12,000. b. $6,000. c. $6,150. d. $5,850. 30. Moore Corporation issued $150,000 of 10-year, 8% bonds for 102 on January 1, 2000. Interest is payable on January 1 and July 1 ...
[DOC File]BEE GEE MOVIE - INITIAL ASSIGNMENT BOND HANDOUT
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The loan can be repaid using the amortization method at an annual effective interest rate of i. If the annual payment under either option is equal, calculate i. (11 points) A 20 year bond with annual coupons is redeemable at its par value of 10,000. The bond was purchased to yield 8% annually.
Effective Interest Method
Under effective-interest amortization, the amount of premium or discount amortized is different each period. Effective-interest amortization of bond premium and discount correctly measures the current cash equivalent amount of the bonds and the interest expense reported on the income statement based on the issuance entry.
[DOC File]Old Exam Packet – Acct 284
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Using the effective-interest method of amortization, interest expense for 2007 is. a. $60,000. b. $64,436. c. $64,620. d. $72,000. 76. On January 2, 2007, a calendar-year corporation sold 8% bonds with a face value of $600,000. These bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold ...
[DOC File]Professor Paul Zarowin - NYU Stern School of Business
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Sep 03, 2010 · Use the effective interest method for discount and premium amortization (construct amortization tables. where applicable). Amortize premium or discount on interest dates and at year-end. (Assume that no reversing. entries were made.) 1. Danny Ferry Co. 3/1/01 Cash 236,045 Discount on Bonds Payable 13,955 Bonds Payable 250,000 Maturity value of ...
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2An alternative method is straight-line (SL) amortization, which is often used if bonds are issued between coupon payment dates, because it is simpler to use than the effective interest method in this case. The SL method computes the monthly amortization evenly over the life of the bond.
[DOCX File]Chapter 10
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, determine the bond selling price and prepare an amortization schedule using the “Effective Interest Amortization Method” as shown in Chp 10 & Appendix “F”. 1) Bee Gee Movie, Inc. plans to issue a $1 million bond offering on January 1, 2015 to finance an upcoming motion picture thriller entitled “Chasing the Accounting Dream”.
[DOC File]1 - Purdue University
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18. Amortization Inc. issued $10,000, 10%, 10-year bonds for an issue price of $10,777 . Amortization uses the effective interest method to amortize any premium or discount on issued bonds. Assuming a market rate of interest of 8%, what amount of premium should be amortized for the first year of the bond’s life? A. $ 78. B. $ 138. C. $ 862
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