Watson Corporation issued $500,000 of 8%, 10-year bonds on January 1, 2017 at face value. The bonds

Question:

Watson issued $500,000 of 8%, 10-year bonds on January 1, 2017 at face value. The bonds require annual interest payments each December 31. Costs associated with the bond issuance were $25,000. Watson follows ASPE and uses the straight-line method to amortize bond issue costs. Prepare the journal entry for
(a) The January 1, 2017 issuance and
(b) The December 31, 2017 interest payment and bond issuance cost amortization.
(c) What are the general principles surrounding accounting for transaction costs associated with the issue of notes or bonds?
(d) What are the implications if the bonds were trading on the market for more than their face value?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...