Determine the amortization of discount

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Reference no: EM133012317

Question - LALISA Company issued P2,000,000 8% serial bonds on December 31, 2016, to be repaid in the amount of P400,000 each year. Interest is payable annually on December 31. The bonds were issued to yields 10% a year. The bond proceeds were P1,902,800 based on the present value at December 31, 2016 of five annual payments as follows:

Due dates

Principals

Interest

12/31/17

400,000

160,000

12/31/18

400,000

128,000

12/31/19

400,000

96,000

12/31/20

400,000

64,000

12/31/21

400,000

32,000

The company uses the effective method in amortizing bond premium or discount.

Required - Based on the above, determine the following:

1. Determine the amortization of discount for 2017?

2. Determine the carrying value of the bonds payable as of December 31, 2017?

Reference no: EM133012317

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