Bond Issue Costs

question 174

Multiple Choice

Bond issue costs

• A)must be expensed when incurred.
• B)must be amortized over the life of the bonds.
• C)are recorded in an asset account and not amortized.
• D)appear on the balance sheet as a liability.

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Definitions:

Par Stock

The nominal or face value assigned to shares of stock by the corporation's charter, which may differ from their market value.

Market Value Method

An accounting method that values assets or securities at their current market prices rather than at historical costs or book values.

Book Value Method

An accounting technique where assets are valued in the balance sheet at their original cost minus any accumulated depreciation.

Stockholder's Equity

The residual interest in the assets of the corporation after deducting liabilities, representing the ownership interest of shareholders.