If a bond for a capital project is issued at a premium then these funds are generally: A. Bonds do not sell at a premium, only a

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If a bond for a capital project is issued at a premium then these funds are generally: A. Bonds do not sell at a premium, only a

t face value B. Retained in the capital projects fund C. Transferred to the General Fund D. It depends on the debt covenants E. Transferred to the debt service fund

Social Studies

1 answer:

Zinaida [17] · Answer 1 · 2022-04-12T08:57:40+03:00

Answer:

When bonds are issued for more than their par value, the premium can be interpreted as an adjustment of the interest rate and transferred to the debt service fund — the fund in which resources for the payment of debt will be accumulated. Although the same interpretation can be placed upon bond discounts, there may be no funds available in the debt service fund (or any other fund) for transfer to the capital projects fund. Therefore, the project must be scaled back or additional means of financing secured.

Explanation:

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