Restoration Company issued bonds that had the following data associated with the

ID: 2380425 • Letter: R

Question

Restoration Company issued bonds that had the following data associated with them:

Interest to be paid is $40,000.

Interest expense to be recorded is $45,000.

Which of the following characteristics is true?

Answer

The bonds are sold at a premium.

After recording the interest expense, the amortization will decrease the bond carrying value.

The difference between the interest expense and the interest to be paid is the bond's par value.

After recording the interest expense, the amortization will increase the bond carrying value.

The bonds are sold at a premium.

After recording the interest expense, the amortization will decrease the bond carrying value.

The difference between the interest expense and the interest to be paid is the bond's par value.

After recording the interest expense, the amortization will increase the bond carrying value.

d - After recording the interest expense, the amortization will increase the bond carrying value.

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