Question

A bond issue on June 1, 2016, has interest payment dates of April 1 and October 1. Bond interest expense for the year ended December 31, 2016, is for a period of

Answer 1

The answer is seven months.

Given,

A bond issue on June 1, 2016

Interest payment dates of April 1 and October 1

To calculate:

Bond interest expense for the year ended December 31, 2016

Since we know that interest expense is for the time the bonds were outstanding during the reporting period.

Therefore,

Bonds issued on June-1, 2016

months Total = June to December = seven months

Since, Interest payment date is October 1, 2016.

This means interest will be paid on this date.

Also, for the year will be included in the interest expense along with the accrued interest for the remaining 4 months (October 1, 2016 to December 31, 2016).

Hence, the Bond interest expense for the year ended December 31, 2016, is for a period of seven months.

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