A Bond with a Face Value of $10,000 Is Issued

question 46

Essay

A bond with a face value of $10,000 is issued at a discount of $800 on January 1, 2014. The face rate of interest on the bond is 7%.
REQUIRED:
1. Was the market rate at the time of issuance greater than 7% or less than 7%?
2. If a balance sheet is presented on January 1, 2014, how will the bonds appear on the balance sheet?
3. If a balance sheet is presented on December 31, 2014, will the amount for the bonds be higher or lower than on January 1, 2014?

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Definitions:

Canadian Labor Law

The body of laws regulating employment, unions, and collective bargaining in Canada.

Decentralization

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The ability of a company to adapt to changes in the market or industry, altering operations or structures to meet new challenges.

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