Question

Brimfest Corporation issued $ 2 400 000​, 10​-year, 6​% bonds for $ 2 352 comma 000 on January​ 1, 2019. Interest is paid semiannually on January 1 and July 1. The corporation uses the​ straight-line method of amortization. Brimfest​'s fiscal year ends on December 31. The amount of discount amortization on July​ 1, 2019​, would be:

Answer 1

Answer:

The bond amortization on July 1,2019 is $2,400

Explanation:

discount on bond issuance =Face value of the bond-issue price

face value of the bond is $2,400,000

issue price is $2,352,000

Discount on bond issuance=$2,400,000-$2,352,000

                                            =$48000

annual bond amortization=discount on the bond/years to maturity

years to maturity is 10 years

annual bond amortization=$48,000/10

                                         =$4,800

However six-month amortization=$4800*6/12

                                                       =$2,400