Question
YaYa Company issued bonds with a contract interest rate of 10% and a face amount of $200,000. The bonds mature in 15 years. The market
YaYa Company issued bonds with a contract interest rate of 10% and a face amount of $200,000. The bonds mature in 15 years. The market interest rate for bonds with the same degree of riskiness is 8% compounded annually. These bonds were issued on January 1 of Year 1 at a price of $234,238. Cash Interest payments are made annually on December 31, so the first interest payment was made on December 31 of Year 1. YaYa uses the effective-interest method on its books.
What is the dollar amount of the bond premium or discount recorded on YaYas books after the cash payment of the last cash interest payment but before the payment of the face value of the bond? (Do not write the dollar sign).
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