What the company would report for net bond liability

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Problem 1: Gamma Inc. issued bonds with 4% stated annual coupon rate on October 1, 2015. The bonds have a maturity date of September 30, 2025, and a face value of $300 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2016. The effective interest rate established by the market at the time of bond issuance was 6% per year. Assume that Gamma issued the bonds for $255,369,000 cash and uses straight-line amortization of its discounts. As of March 31, 2016, which of the following is closest to what the company would report for its net bond liability balance, rounded to the nearest thousand?

A) $258,369,000
B) $300,000,000
C) $253,137,000
D) $257,601,000

Reference no: EM132660601

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