Answer:
The net amount of the liability Myriad would report in its balance sheet at December 31, 2021 is $287,524,896
Explanation:
First, we need to determine the amount of discount on the bond at the time of issuance
Discount on Bond = Face value - Issuance value = $320,000,000 - $283,294,720 = $36,705,280
June 30, 2021
Now we will use the effective interest method to calculate the amortization of discount on the bond.
Amortization of Discount = ( Carrying Value x Market yield ) - ( Face value x Coupon rate ) = ( $283,294,720 x 12% ) - ( $320,000,000 x 10% ) = $33,995,366.4 - $32,000,000 = $1,995,366.4 = $1,995,366
Carrying value = $283,294,720 + $1,995,366 = $285,290,086
December 31, 2021
Now we will use the effective interest method to calculate the amortization of discount on the bond.
Amortization of Discount = ( Carrying Value x Market yield ) - ( Face value x Coupon rate ) = ( $285,290,086 x 12% ) - ( $320,000,000 x 10% ) = $34,234,810.32 - $32,000,000 = $2,234,810.32 = $2,234,810
Carrying value = $285,290,086 + $2,234,810 = $287,524,896
