If Bonds Are Issued for a Price Below Their Face

question 16

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)shown as an addition to Bonds Payable in the Long-Term Liabilities section of the balance sheet.
• C)amortized over the life of the bond issue.
• D)shown as a current liability on the balance sheet.

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Definitions:

Computer Sales

The business activity of selling computers, computer components, and software to consumers or other businesses.

Title Passes

The legal transfer of ownership of a property from the seller to the buyer.

Physically Delivered

Refers to contracts, particularly in commodities trading, where the actual physical commodity is delivered upon contract expiration.

Buyer in Ordinary

Refers to a purchaser of goods who buys from someone who usually sells such goods, thereby granting certain legal protections under commercial law.