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On January 1, Year 1, Residence Company issued bonds with a $67,000 face value. The bonds were issued at 104 resulting in a 4% premium.
On January 1, Year 1, Residence Company issued bonds with a $67,000 face value. The bonds were issued at 104 resulting in a 4% premium. They had a 20-year term, a stated rate of interest of 7%, and an effective rate of interest of 6.633%. Assuming Residence uses the effective interest rate method, the book value of the bond liability recognized on December 31, Year 2 is:
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$68,949.
$65,105.
$69,000.
$69,539.
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