Question
Exercise 14-9 On June 30, 2017, Teal Company issued $4,900,000 face value of 13%, 20-year bonds at $5,268,625, a yield of 12%. Teal uses the
Exercise 14-9
On June 30, 2017, Teal Company issued $4,900,000 face value of 13%, 20-year bonds at $5,268,625, a yield of 12%. Teal uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31.
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Provide the answers to the following questions. (1) What amount of interest expense is reported for 2018? (Round answer to 0 decimal places, e.g. 38,548.)
Interest expense reported for 2018 | $ |
The bond interest expense reported in 2018 will be greater than, less than or same as the amount that would be reported if the straight-line method of amortization were used. |
Total cost of borrowing over the life of the bond | $ |
The total bond interest expense for the life of the bond will be greater than less than or the same as the total interest expense if the straight-line method of amortization were used. |
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