ACC 304 All Assignments ACC 304 All Assignments | Page 237
Bond issuance costs are recorded as a reduction of the carrying
value of the debt under GAAP but are recorded as an asset and
amortized to expense over the term of the debt under IFRS.
10) On January 1, Patterson Inc. issued $5,000,000, 9% bonds for
$4,695,000. The market rate of interest for these bonds is 10%. Interest
is payable annually on December 31. Patterson uses the
effectiveinterest method of amortizing bond discount. At the end of the
first year, Patterson should report bonds payable of:
11) On January 1, Martinez Inc. issued $3,000,000, 11% bonds for
$3,195,000. The market rate of interest for these bonds is 10%. Interest
is payable annually on December 31. Martinez uses the
effectiveinterest method of amortizing bond premium. At the end of
the first year, Martinez should report bonds payable of: