Brimfest Corporation issued $ 2 400 000, 10-year, 6% bonds for $ 2 352 comma 000 on January 1, 2019. Interest is paid semian

Question

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Brimfest Corporation issued $ 2 400 000, 10-year, 6% bonds for $ 2 352 comma 000 on January 1, 2019. Interest is paid semian

nually 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:

Business

1 answer:

Troyanec [42] · Answer 1 · 2022-07-22T17:30:11+03:00

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

Brimfest Corporation issued $ 2 400 000​, 10​-year, 6​% bonds for $ 2 352 comma 000 on January​ 1, 2019. Interest is paid semian

Brimfest Corporation issued $ 2 400 000, 10-year, 6% bonds for $ 2 352 comma 000 on January 1, 2019. Interest is paid semian