Reference no: EM132885246

NoleCo issues bonds on January 1, 20X1. The bonds mature ten years from this date and pay interest semi-annually on June 30 and December 31 each year. The face value of the bonds is $500,000 and the coupon/stated rate is 6%. The market rate on the issue date is 5%. The bonds were issued for $538,973.
Required: Complete the three parts below.

Problem 1: The interest expense that NoleCo should recognize on June 30, 20X1 is:

Option 1: $15,000
Option 2: $16,169
Option 3: $13,826
Option 4: $12,500
Option 5: $13,474

Problem 2: The interest expense that NoleCo should recognize on December 31, 20X1 is:

Option 1: $13,436
Option 2: $13,512
Option 3: $15,000
Option 4: $13,792
Option 5: $16,123

Problem 3: The carrying value of these bonds on December 31, 20X1 (after the interest payment on that date) is:

Option 1: $541,265
Option 2: $535,883
Option 3: $536,591
Option 4: $533,248
Option 5: $500,000