Diaz Company issued bonds with a face value of $ on January Year The bonds had a stated interest rate of percent 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
a Use a financial statements model 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.
b Determine the carrying value face value less discount or plus premium of the bond liability as of December Year
c Determine the amount of interest expense reported on the Year income statement.
d Determine the carrying value face value less discount or plus premium of the bond liability as of December Year
e Determine the amount of interest expense reported on the Year income statement.
