Example of bond premium amortization
[DOC File]Godgift
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7. Amortization of a premium increases bond interest expense, while amortization of a discount decreases bond interest expense. 8. A bond may only be issued on an interest payment date. 9. The cash paid for interest will always be greater than interest expense when using effective-interest amortization for a bond. 10.
[DOC File]1._Some of the factors to be considered in determining ...
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On June 30, year 1, after amortization was recorded for the period, the unamortized bond premium and bond issue costs were $30,000 and $50,000, respectively. On that date, King acquired all its outstanding bonds on the open market at 98 and retired them.
[DOC File]Chapter 3
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A bond can also be issue at over 100 or issued at a premium. For example issuing at bond at 101 would mean issuing a bond for 101% of the bond principal. If the bond principal is $100,000 and the bond is issued at 98 the issue price is as follows: 100,000 * 98% = $98,000. If the bond principal is $100,000 and the bond is issued at 100 the issue ...
[DOC File]Module 1 Instructor's Notes
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(4,650) Subtract Amortization of Bond Premium (350) (5,000) Net income $37,350 $37,000 1. Direct Method: Cash collected from customers $42,000. Cash paid for interest (5,000) Net cash flow from operating activities $37,000. 2. Indirect Method: Net income $37,350. Less: Amortization of bond premium …
[DOCX File]Chapter 10
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Amortizing premium up-dates the book value of the bond (decreases book value—at maturity book value equal face). Two methods of amortization: Straight-line—same as for a discount. Effective interest method—same as for a discount except interest paid – interest expense equals periodic premium amortization). Accruing Bond Interest Expense
How to Calculate an Amortized Bond Premium | Bizfluent
( Amortizing Bond Premium. The amortization of bond premium parallels that of bond discount. Continuing the Candlestick, Inc. example, assume the bonds are sold for $102,000, rather than $98,000. This results in a bond premium of $2,000 ($100,000 - $102,000). The premium amortization for each interest period is $400 ($2,000 ( 5).
[DOC File]Godgift
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- Amortization of bond premium (2,000) + Increase in deferred income taxes payable 15,000 - Gain on sale of securities (20,000) - Gain on sale of equipment (5,000) - Increase in accounts receivable, net (90,000) - Increase in inventories (115,000) - Decrease in accounts payable and . accrued expenses (63,000) Net cash flow provided by ...
[DOC File]CHAPTER 10
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Bond premiums are amortized over the life of a bond, using either the straight-line or effective-interest method. When bond premium amortization is recorded, the amount of bond premium is reduced. The reduction reported in the note is the result of the required amortization of the bond premium.
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b. Deposit to a bond sinking fund. c. Sale of a loan receivable. d. Payment of interest to a creditor. S35. The amortization of bond premium on long-term debt should be presented in a statement of cash flows (using the indirect method for operating activities) as a(n) a. addition to net income. b. deduction from net income. c. investing activity.
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