If Bonds Are Issued for a Price Below Their Face

question 10

Multiple Choice

If bonds are issued for a price below their face value,the bond discount should be

• A) charged to expense on the date the bonds are issued.
• B) amortized over the life of the bond issue.
• C) shown as an addition to Bonds Payable in the Long-Term Liabilities section of the balance sheet.
• D) shown as a current liability on the balance sheet.

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Definitions:

P(A|B)

The likelihood of event A happening, provided that event B has already taken place, signifying a conditional probability.

Disjoint Events

Disjoint events are two or more events that cannot occur simultaneously, indicating there is no overlap in their outcomes.

Nonzero Probabilities

This implies that events or outcomes have a likelihood greater than zero of occurring.

Disjoint Events

Two events that cannot occur at the same time, implying they have no outcomes in common.