Question

During the year, Hamlet Inc. paid $22,000 to have bond certificates printed and engraved, paid $170,000 in legal fees, paid $9,000 to a CPA for registration information, and paid $280,000 to an underwriter as a commission. What is the amount of bond issue costs

Answer 1

Answer:

$481,000

Explanation:

Bond issue costs are either direct or indirect costs:

• direct costs include underwriting fees, listing fees, professional fees, compliance costs and other costs related to the IPO or APO (secondary issues), e.g printing costs
• indirect costs include underpricing costs (IPO pricing is too low) and loss of proprietary information

Total bond issue costs = $22,000 + $170,000 + $9,000 + $280,000 = $481,000