Unformatted text preview: Carrying amount = Face value Less Discount Balance Balance Sheet January 1 Long-Term Liabilities: Bonds Payable $100,000 Less: Discount ($3,851) $96,149 Interest Expense on Bonds Issued at a Discount • The company must pay interest based on the face value even though it received less than face value Interest Expense = Carrying Amount of Bond x Market Interest Rate • Discount is amortized (reduced) over the bond term....
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This note was uploaded on 06/15/2011 for the course ACCT 23020 taught by Professor Dorff,p during the Spring '08 term at Kent State.
- Spring '08
- Financial Accounting