Newton Corporation sold its $1,000,000, 7% ten-year bonds to the public on January 1, 2011. The bonds pay interest annually, beginning on December 31, 2011. Newton received $1,153,420 in cash at the issuance of the bonds. The market rate of interest when the bonds were sold was 5%.Compute the amount of the premium that Newton Corporation should amortize on December 31, 2011, assuming the â€œeffective-interestâ€ method is used.YearInterest Expense â€“ 5%Interest Paid â€“ 7%PremiumCarrying Value157,67170,00012,3291,153,420Premium: 12,329Interest Expense: 57,671Carrying Value: 1,141,091
bigthoughtwritingservices is a unique service that provides guidance with different types of content. Please rest assured that the service is absolutely legal and doesn’t violate any regulations. It can be used for generating new ideas and thoughts for your own project, additional insight into the subject, or encouragement for further researches.