Premium versus discount

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Premium versus Discount

In reviewing the Becker materials, the lecture, and your eBook reading for this week, there are several considerations. First being the issue price of the bonds payable. Should it be at discount or at a premium? The second consideration is the method used to amortize the bonds discount/premium. The third one is the decision to issue the bonds payable between the interest dates and the fourth but not the last one is the extinguishment of bonds payable.

  1. Now discuss with suitable examples how the issue price of bonds payable is determined? When does the issue price results in a discount issue or a premium issue? What are the two methods of amortization of bonds discount/premium and how they are different from each other? What are the accounting issues when bonds payable are issued between the interest dates and when bonds payable are extinguish?
  2. So what's the difference between premiums and discounts?
    What is the Effective Interest Method vs. Straight Line method of amortization? Which is better, and why? And does IFRS allow both?

Reference no: EM131207169

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