Question

Carla vista co. received proceeds of 5585020 on a 10-year, 8% bonds issued on January 1, 2019. The bonds had a face value of 530000, pay interest annually on December 31, an have a call price of 104. Carla vista uses the straight-line method of amortization. What is the carrying value of the bonds on December 31, 2021

Answer 1

The carrying value of the bond is $489,560.

What is the bond?

A bond is a type of instrument in which the issuer owes the bearer a debt and is obligated to pay it based on the conditions of the agreement.

Computation of Carrying value of Bond:

According to the given information,

First, there is a need to calculate the premium amount:

Premium Amount = Face value of Bond – Proceeds received

Premium Amount = $530,000 – $558,5020

Premium Amount = -$505,5020

Now, find the Annual amortization value:

Annual amortization = Premium Amount/Time period

Annual amortization = -$505,5020/10

Annual amortization = -$505,502

Then the carrying value of the bond would be:

Carrying value of bond = face value – unamortized discount

Carrying value of bond = $530,000- (-$505,502×8%)

Carrying value of bond = $489,560

Therefore, the carrying value of the bond is $489,560.

Learn more about the bond, refer to:

https://brainly.com/question/10777799

#SPJ1