Effective-interest, straight-line bond amortization
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On jan 1st 2006, Plotu Co. acquires $200,000 of Funtoy Products, Inc., 9% bonds at a price of $185,589. The interest is payable each dec 31, and the bonds mature dec 31, 2008. The investment will provide Funtoy a 12% yield. The bonds are classified as held-to-maturity.
a) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method
b) Prepare a 3-year schedule of interest revenue and bond discount, applying the effective-interest-method
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Solution Summary
Prepares schedule of interest revenue and bond discount amortization using i) effective-interest and ii) straight-line bond amortization methods.
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