Question
On January 1, 2021, Wonder Co. issued P20,000,000, 9%, 10-year bonds for P16,609,866.18. The bonds were issued at an effective interest rate of 12%. Interest
On January 1, 2021, Wonder Co. issued P20,000,000, 9%, 10-year bonds for P16,609,866.18. The bonds
were issued at an effective interest rate of 12%. Interest is paid every December 31.
On December 31, 2022, after the payment of the annual interest, Wonder reacquired and retired bonds
that have a face value of P4,000,000 at 88.
On April 1, 2024, Wonder reacquired and retired bonds that have a face value of P6,000,000 at 86 plus
accrued interest.
1. How much is the interest expense incurred by Wonder in 2024? 2.Determine the carrying amount of the bonds on December 31, 2024. 3. Compute for the interest expense incurred by Wonder in 2025.
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Intermediate Accounting
Authors: Loren A. Nikolai, John D. Bazley, Jefferson P. Jones
11th edition
978-0538467087, 9781111781262, 538467088, 1111781265, 978-0324659139
