Asked by Shanda Harrison on Jun 19, 2024
Verified
If bonds are issued at a discount the issuing corporation will pay a principal amount less than the face amount of the bonds on the maturity date.
Discount
A reduction in the price of a product or service, usually to encourage sales or as an allowance for prompt payment.
Issuing Corporation
A company or entity that releases (issues) securities, such as stocks or bonds, to raise capital.
- Familiarize oneself with the accounting methods for bonds issued above or below par value, at par value, and the subsequent acknowledgment of interest expenses.
- Gain insight into the procedures of issuing and redeeming bonds, and their impact on the economic health and credit evaluation of a corporation.
Verified Answer
GS
Gagandeep singhJun 23, 2024
Final Answer :
False
Explanation :
When bonds are issued at a discount, the issuing corporation still pays the full face amount of the bonds on the maturity date; the discount affects the interest expense and the amount raised at issuance, not the maturity value.
Learning Objectives
- Familiarize oneself with the accounting methods for bonds issued above or below par value, at par value, and the subsequent acknowledgment of interest expenses.
- Gain insight into the procedures of issuing and redeeming bonds, and their impact on the economic health and credit evaluation of a corporation.