Question

A $200,000 4 year bond was issued for $210,000. The semi-annual amortization of the bond premium using the straight-line method equals $ _____.

Answer 1

Answer:

$1,250

Explanation:

The computation of the semi-annual amortization of the bond premium is shown below:

= (Issued amount - proceeds from the bonds) ÷ time period ÷ semi-annual

= ($210,000 - $200,000) ÷ 4 years ÷  2

= $10,000 ÷ 4 years ÷ 2

= $1,250

In the case of semi-annual, we simply divided by 2 so that the accurate amount can come.