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17 download_doc-8.php - A311(2/10/2009)...

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A311 (2/10/2009) Chapter 6 Problems (cont.) Problem 4 Interest Expense Recognition for 6 months ended 12/31/01: INT EXP = Debt • r* • 12/12   104…. .for YE 12/31/01      1042   .10 Contractual Interest 1  = Contractual Principal • r • 12/12 = 120…. .for YE 12/31/01        1000             .12 Accounting Entry  ----------------- ….for 6  months ended 12/31 Interest Expense Payable…….(60)  120 – 60 Debt………………………………………. .8   “ Plug” Interest Expense…………………….52   104 – 52 Note : This method of measuring/recognizing interest expense only works when there are no   interim principal or interest payments  (more general methods are studied in A312). Also note  that interest expense for year ended 12/31/02 is…. .           
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This note was uploaded on 04/18/2011 for the course BUS 311 taught by Professor Palmer during the Winter '11 term at Indiana.

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17 download_doc-8.php - A311(2/10/2009)...

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