1. A company is comparing straight-line and double-declining balance amortization methods for a non-renewable six-year license, acquired for 800,000.Calculate the difference between the year 4 ending net book value using two different method?
2. A company issues $3,000,000 face value of 8-year bonds on 1 January 2015 when the market interest rate on bonds of comparable risk and terms is 3%. The bonds pay 5% interest annually on 31 December. At the time of issue, how much is the bonds payable value reflected on the balance sheet?
3. Midland Brands issues three-year bonds dated 1 January 2015 with a face value of $5,000,000. The market interest rate on bonds of comparable risk and term is 6%. If the bonds pay 3% annually on 31 December. What is the value of bonds payable when issued?
4. On 1 January 2010, Elegant Fragrances Company issues 1,000,000 face value, five-year bonds with annual interest payments of 65,000 to be paid each 31 December. The market interest rate is 5.0 percent. Using the effective interest rate method of amortisation, how much is Elegant Fragrances is most likely to record?
5. Consolidated Enterprises issues 1 million face value, five-year bonds with a coupon rate of 1 percent. At the time of issuance, the market interest rate is 2.0 percent. Using the effective interest rate method of amortisation, calculate the carrying value after one year?