Exercise 146 Schedule of Discount Amortization StraightLine

Exercise 14-6

Schedule of Discount Amortization Straight-Line Method Carrying Amount of Bonds Discount Interest ExpenseAmortized Paid Year Jan. 1, 2017 Jan. 1, 2018 Jan. 1, 2019 Jan. 1, 2020 Jan. 1, 2021 Jan. 1, 2022 Click if you would like to Show Work for this question: Open Show Work

Solution

Schedule of Discount Amortization

Straight Line Method

Year

Cash Paid

Interest Expenses

Discount Amortized

Carrying Amount of Bond

Jan 1, 2017

-

-

-

1,968,369

Jan 1, 2018

184,000

250,326

66,326

2,034,695

Jan 1, 2019

184,000

250,326

66,326

2,101,021

Jan 1, 2020

184,000

250,326

66,326

2,167,348

Jan 1, 2021

184,000

250,326

66,326

2,233,674

Jan 1, 2022

184,000

250,326

66,326

2,300,000

Face Value of the Bond = $2,300,000

Selling Price of the Bond = $1,968,369

Discount on Issue of Bond = face Value of the Bond – Selling Price of the Bond

= $2,300,000 - $1,968,369

= $ 331,631

Amortization amount of Bond under straight line method over the maturity period

= Total Discount on Issue of Bond / maturity period

= $ 331,631 / 5 Years

= $66,326 per year

Interest Expenses of the Bond

= Coupon Amount + Discount Amortization

= [$23,00,000 x 8%] + $66,326

= $250,326

Schedule of Discount Amortization
Straight Line Method
Year	Cash Paid	Interest Expenses	Discount Amortized	Carrying Amount of Bond
Jan 1, 2017	-	-	-	1,968,369
Jan 1, 2018	184,000	250,326	66,326	2,034,695
Jan 1, 2019	184,000	250,326	66,326	2,101,021
Jan 1, 2020	184,000	250,326	66,326	2,167,348
Jan 1, 2021	184,000	250,326	66,326	2,233,674
Jan 1, 2022	184,000	250,326	66,326	2,300,000