garland company received proceeds of $188,000 on 10-year, 6% bonds issued on january 1, 2013. the bonds had a face value of $200,000, pay interest semi-annually on june 30 and december 31, and have a call price of 101. garland uses the straight-line method of amortization. what is the carrying value of the bonds on january 1, 2015?

Garland company received proceeds of $188,000 on 10-year, 6% bonds issued on january 1, 2013. The carrying value of the bonds on january 1, 2015 is $12000.

What is amortization?

Amortization is an accounting method used over a certain period of time to gradually reduce the book value of a loan or other intangible asset. Amortization of a loan focuses on deferring loan payments over a period of time. Amortization is comparable to depreciation in terms of how it affects an asset. Two scenarios are described by the term "amortization." First, amortization is a tool used in the process of repaying debt over time with consistent principal and interest payments. Through periodic payments, an amortization schedule is used to lower the outstanding balance on a loan, such as a mortgage or vehicle loan. Second, for accounting and tax purposes, amortization can also refer to the technique of distributing capital expenses associated with intangible assets over a predetermined period, often over the asset's useful life.

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