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7252569-MIdterm-1 (dragged) 21 - Kieso Weygandt Warfield...

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Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Eighth Canadian Edition 14-5 over the entire life of the bonds. The entry to amortize the bond discount at the end of 2004 would be: Bond Interest Expense 400 Bonds Payable 400 The entry to amortize the premium would be: Bonds Payable 400 Bond Interest Expense 400 Note that the amortization of the discount increases the bond interest expense for the period and the amortization of the premium reduces bond interest expense for the period. 12. When bonds are issued between interest dates, the issuer must receive the purchase price plus an amount equal to the interest earned on the bonds since the last interest payment date. On the next interest payment date, the bondholder receives the entire semi-annual (if payable semi-annually) interest payment. However, the amount of interest expense to the issuing corporation is the difference between the semi-annual interest payment and the amount of the interest prepaid by the purchaser. For example, assume a 10-year bond
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