Q10RQ
Question
What is the carrying amount of a bond?
Step-by-Step Solution
Verified Answer
Difference between the bond payable and discount amount is the carrying amount of bond.
1Step 1: Definition of bond
A bond is shown as the liabilities in the books of accounts. Bond is the value of loan take by the company by making bond agreement.
2Step 2: Carrying amount of bond
The price at which the bond is purchased is known as the carrying amount of the bond. Carrying value is calculated by subtracting unamortised discount and adding unamortised premium in the face value.
For example: If the face value of a bond is $35, but it is purchased at $40, then $40 is known as the carrying amount of the bond.
Other exercises in this chapter
Q8RQ
When a bond is issued, what is its present value?
View solution Q9RQ
Why would a company choose to issue bonds instead of issuing stock?
View solution Q11RQ
In regard to a bond discount or premium, what is the straight-line amortizationmethod?
View solution Q12RQ
What type of account is Discount on Bonds Payable? What is its average balance? Is it added to or subtracted from the Bonds Payable charge to determine the carr
View solution