Question 11. 11. (TCO D) Under the effective-interest method of bond discount or premium amortization, the periodic interest expense is equal to (Points : 5)

the stated (nominal) rate of interest multiplied by the face value of the bonds. the market rate of interest multiplied by the face value of the bonds. the stated rate multiplied by the beginning-of-period carrying amount of the bonds. the market rate multiplied by the beginning-of-period carrying amount of the bonds.

Question 12. 12. (TCO D) The printing costs and legal fees associated with the issuance of bonds should (Points : 5)

be expensed when incurred. be reported as a deduction from the face amount of bonds payable. be accumulated in a deferred charge account and amortized over the life of the bonds. not be reported as an expense until the period the bonds mature or are retired.

Question 13. 13. (TCO D) Feller Company issues $20,000,000 of 10-year, 9% bonds on March 1, 2010 at 97 plus accrued interest. The bonds are dated January 1, 2010, and pay interest on June 30 and December 31. What is the total cash received on the issue date? (Points : 5)

$19,400,000 $20,450,000 $19,700,000 $19,100,000

Question 14. 14. (TCO D) A company issues $5,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2010. Interest is paid on June 30 and December 31. The proceeds from the bonds are $4,901,036. Using effective-interest amortization, how much interest expense will be recognized in 2010? (Points : 5)

$195,000 $390,000 $392,124 $392,083

Question 15. 15. (TCO D) Clothes Horse Corp. ("CHC") issued $500,000 bonds due in 10 years on January 1, Year 1 at a premium for $567,105. Bond issue costs of $25,000 are being amortized over the 10 year life of the bonds under U.S. GAAP. On January 1, Year 6, when the carrying value of the bond was $539,940, CHC redeemed the bonds at 102. What amount of gain should CHC record related to the redemption? (Points : 5)

$10,000 $17,440 $39,940 $52,440