Bonds with a Face Amount $1,000,000, Are Sold at 108

question 107

Multiple Choice

Bonds with a face amount $1,000,000, are sold at 108. The entry to record the issuance is

• A) Cash 1,000,000 Premium on Bonds Payable 80,000
• Bonds Payable 1,080,000
• B) Cash 1,080,000 Premium on Bonds Payable 80,000
• Bonds Payable 1,000,000
• C) Cash 1,080,000 Discount on Bonds Payable 80,000
• Bonds Payable 1,000,000
• D) Cash 1,080,000 Bonds Payable 1,080,000

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Definitions:

Placed In Service

The point in time when an asset is ready and available for its intended use, often marking the start of depreciation or amortization for accounting purposes.

Depreciable Cost

The total cost of an asset that is subject to depreciation, including purchase price and any additional expenses to bring the asset to its intended use, minus salvage value.

Straight-Line Depreciation

An approach to apportion the value of a tangible asset across its productive years in uniform yearly sums.

Estimated Useful Life

The expected timeframe during which an asset is considered to be useful or productive for its intended purpose.