Effect of Transactions on Financial Statements Balance Sheet Income Statement Event No. Assets = Liabilities + Stockholders' Equity Revenue Expense = Net Income Statement of Cash Flow 1. 2a. + + + 2b. + +/- b. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, Year 1. c. Determine the amount of interest expense reported on the Year 1 income statement. d. Determine the carrying value of the bond liability as of December 31, Year 2. e. Determine the amount of interest expense reported on the Year 2 income statement. b. Carrying value c. Interest expense d. Carrying value e. Interest expense