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Determine the carrying value of the bond liability

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Problem - Diaz Company issued bonds on January 1, Year 1. Interest is paid annually to bond holders beginning December 31, Year 1. The company uses straight-line method for bond amortization. You have the following data available:

Face value of the bond $76,000

Stated rate of interest on the bond 6.00%

Bond maturity period 10 years

Bonds were issued at 98

Required -

a] Determine the carrying value of the bond liability as of December 31, Year 1.

b] Determine the amount of interest expense reported in Year 1 income statement.

c] Determine the carrying value of the bond liability as of December 31. Year 2.

d] Determine the amount of interest expense reported in Year 2 income statement.

Reference no: EM133028752

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