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# Reporting Bonds Issued at Par LO 10-2

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P10-2 Reporting Bonds Issued at Par LO 10-2

On January 1, 2014, Nowell Company issued \$500,000 in bonds that mature in five years. The bonds have a stated interest rate of 8 percent and pay interest on June 30 and December 31 each year. When the bonds were sold, the market rate of interest was 8 percent. (If necessary, use the appropriate factor(s) from the tables provided.) (FV of \$1 PV of \$1 FVA of \$1 PVA of \$1 )

Required:
1 What was the issue price on January 1, 2014?

Issue price

2 What amount of interest expense should be recorded on (a) June 30, 2014? and (b) December 31, 2014?

June 30, 2014 December 31, 2014
Interest expense

3 What amount of cash interest should be paid on (a) June 30, 2014? and (b) December 31, 2014?

June 30, 2014 December 31, 2014
Cash paid

4 What is the book value of the bonds on (a) December 31, 2014? and (b) December 31, 2015?

December 31, 2014 December 31, 2015
Bonds payable

(See attached file)

#### Solution Summary

This solution provides answers to various questions regarding bonds in Excel

\$2.19

## Critically evaluate: Historic cost or alternative measurement base

Historic cost should be replaced by an alternative measurement base in order to make financial statement more useful.
Critically discuss this statement, concluding with whether or not you agree with it.

Consider the following:

Critically discuss the role and relevance of financial accounting information to the principal stakeholders in the business.
Appraise the limitation of financial accounting as a system of reporting business performance
Communicate financial information and concept.
Some description and explanation is needed but you need to develop arguments and discussion.
You are expected to take a critical perspective, for example recognize the limitations of certain measurement bases.

Referred to: Information for Better Markets: Measurement in Financial Reporting (Institute of Chartered Accountants in England and Wales) icaew.com/bettermarkets

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