What is the initial carrying amount of the bonds

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Reference no: EM132700696

On january 1 20x1 an entity issues bonds with face amount of P 5,000,000 for P 4,800,000. The bonds mature on December 31, 20x3 and pay annual interest of 10% every December 31. The entity incurs bonds issue costs of P 473, 767. The effective interest rate adjusted for bond issue cost is 16%.

Requirement:

Question a. What is the initial carrying amount of the bonds.

Question b. What is net discount or a net premium (includig the effect of the bond issue cost) from the issuance on initial recognition.

Question c. Are the periodic interest payments greater than or less than the periodic interest expense?

Question d. What are the journal entries during the term of the bonds.

Reference no: EM132700696

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