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Ten Year, 6% Bonds with a $4,000,000 par value , were issued at a time when the market rate of interest was 8%. The
Discount /Premium on these Bonds is amortized semi
-annually each interest period. Given these facts, which of
the following
statements would be true?
a.
The amount of unamortized premium decreases from its balance at issuance date and the carrying
value of the Bond increases.
b.
The amount of unamortized discount decreases from its balance at issuance date and the carrying
value of the Bond increases.
c.
The amount of unamortized premium increases from its balance at issuance date and the carrying
value of the Bond decreases.
d.
The amount of unamortized discount increases from its balance at issuance date and the carrying
value of the Bond decreases
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