Bonds with a Stated Interest Rate of 9% and a Face

question 94

Essay

Bonds with a stated interest rate of 9% and a face value totaling $600,000 were issued at 104 on January 1,2014,implying an annual market interest rate of 8%.Assuming that interest is computed annually,at what carrying value should the total liability for these bonds be reported two years later on December 31,2015,if the effective-interest method of amortization is used?

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Definitions:

Trochlear Notch

The deep groove at the upper end of the ulna bone that articulates with the trochlea of the humerus in the elbow joint.

Coracoid Process

A small hook-like structure on the scapula (shoulder blade), serving as an attachment point for several arm and chest muscles.

Lesser Trochanter

A bony prominence on the femur near its joint with the hip bone, serving as a point of attachment for several muscles of the lower limb.