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Amortize discount by intest method. On the first day of uts fuscal year, Ebert company issued $ 2 6 , 0 0 0 , 0
Amortize discount by intest method. On the first day of uts fuscal year, Ebert company issued $ of year, bonds to finance its opperations. Interest is payable seniannualyThe bonds were issued at a market effective interest rate of resulting in eberr recieving cash of $ The company uses the interest method.
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As the discount or premium is amortized, the carrying amount of the bond changes. As a result, Interest expense also changes each period.
b Compute the amount of the bond interest expense for the first year. Round to the nearest dollar.
Annual interest paid
Discount amortized
Interest expense for first year
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To find the interest expense either add any discount amortized or subtract any premium amortized to cash paid to the bondholders.
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