Question
The Ginsberg Co. issued 10-year bonds on April 30, YR 1. The debt has a face value of $1,000,000 and an annual stated interest rate
The Ginsberg Co. issued 10-year bonds on April 30, YR 1. The debt has a face value of $1,000,000 and an annual stated interest rate of 8%. Interest payments are due semiannually beginning October 31, YR 1. The market interest rate on the bonds is 10%. Ginsberg amortizes any discount or premium using the effective interest method and has a fiscal year-end of December 31.
In addition, Ginsberg incurs $30,000 of bond issue costs related to this bond issue. Ginsberg uses a straight line to recognize bond issue costs at the end of each year.
How much Bond Issue Cost is amortized on 12/31/YR1?
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Financial Accounting in an Economic Context
Authors: Jamie Pratt
8th Edition
9781118139424, 9781118139431, 470635290, 1118139429, 1118139437, 978-0470635292
