Diaz Company issued bonds with a $ face value on January Year The bonds had a percent stated rate of interest and a year term. Interest is paid in cash annually, beginning December Year The bonds were issued at The straightline method is used for amortization.
Required
Use a financial statements model like the one shown next to demonstrate how the January Year bond issue and the December Year recognition of interest expense, including the amortization of the discount and the cash payment, affect the companys financial statements.
Note: Use for increase or for decrease. In the Statement of Cash Flows column, use the initials OA to designate operating activity, IA for investing activity, and FA for financing activity. Not all cells require input.
Determine the carrying value face value less discount or plus premium of the bond liability as of December Year
Determine the amount of interest expense reported on the Year income statement.
Determine the carrying value face value less discount or plus premium of the bond liability as of December Year
Determine the amount of interest expense reported on the Year income statement.
