On January 1, 2014, HVAC, Inc. issued $50,000 of ten-year 6% bonds for $43,800. Interest was payable semiannually. The effective yield was 8%. The effective interest method of discount amortization was used.
What amount of interest expense should be recorded for the six-month period ending December 31, 2014? And how did you get this answer?
One June 30, 2014:
For the first six moths, the interest expense is based on the market interest rate of 8% and the carrying amount of the ...
Explains how to calculate the interest expense under the effective interest method of discount amortization.