A company issued 6year 8 bonds with a par value of 750000 Th

A company issued 6-year, 8% bonds with a par value of $750,000. The market rate when the bonds were issued was 7.5%. The company received $757,500 cash for the bonds. Using the straight-line method, the amount of recorded interest expense for the first semiannual interest period is:

Solution

Discount amortization per period = (757500-750000)/12= $625 Amount of recorded interest expense for the first semiannual interest period = 625+(750000*8%/2)= $30625