• Bond Amortization = Bond Discount or Premium / Number of Interest Periods

• Interest Paid = Face Amount of Bonds x Stated Interest Rate

• Interest Expense = Interest Paid + Discount ( or Premium) Amortization

On October 1, 2018 ABC issued 5%, 10-year bonds with a face value of $4,000,000 at 104. Interest is paid on October 1 and April 1, with any premiums or discounts amortized on a straight-line basis. What is interest expense for 2018? Assume ABC Company uses straight-line amortization.

N =

Bond premium =

Bond Amortization = Bond Premium / Number of Interest Periods =

Interest Paid = Face Amount of Bonds x Stated Interest Rate =

Interest Expense = Interest Paid - premium amortization =