X2 issued callable bonds on January 1, 2012. The bonds pay interest annually on

Question

X2 issued callable bonds on January 1, 2012. The bonds pay interest annually on December 31 each year. X2's accountant has projected the following amortization schedule from issuance until maturity:

X2 issued the bonds:

At a premium.

Cannot be determined from the given information.

At a discount.

At par.

©2016 McGraw-Hill Education. All rights reserved.

X2 issued callable bonds on January 1, 2012. The bonds pay interest annually on December 31 each year. X2's accountant has projected the following amortization schedule from issuance until maturity:

Explanation / Answer

Solution:

Correct Answer is "X2 issued the bonds: At a premium."

From the given amortization schedule from issuance until maturity, it is clear that Maturity Value of Bond is = $180,000

Generally the bonds are matured at par.

Hence, Par Value of Bonds = $180,000

Carrying Value of BOnd on Issue date (Issue Price of the bonds) = $192,119

Issue Price is higher than Par Value, it means the bonds are issued at premium.

Related Questions

Navigate

• Browse (All)
• Browse X
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.