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 :
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