contestada

Auerbach Inc. issued 4% bonds on October 1, 2021. The bonds have a maturity date of September 30, 2031 and a face value of $425 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2022. The effective interest rate established by the market was 6%. Assuming that Auerbach issued the bonds for $361,772,495, what interest expense would it recognize in its 2021 income statement

Respuesta :

Answer:

The answer is "[tex]360595900[/tex]".

Explanation:

Interest expense for 3 months till December 31, 2021 [tex]= \$361,772,495 \times 6\% \times \frac{3}{12}= 5,426,587.43[/tex]

Less: Interest payable for 3 months till December 31, 2021

[tex]=\$425000000\times 4\% \times \frac{3}{12}= 4,250,000[/tex]

Discount amortized till December 31, 2021: [tex]1176587.43[/tex]

The issue price for Bonds [tex]\$361,772,495[/tex]  

Add: Discount amortized till December 31, 2021 [tex]1176587.43[/tex]

Net bond liability balance at December 31, 2021 [tex]360595907.57[/tex]

360595900 (rounded off)

Otras preguntas