Asked by apoorva kalra on Jun 30, 2024
Verified
Which of the following statements is true?
A) The carrying amount of bonds issued at a discount will initially be higher than the face value.
B) The carrying amount of a bond is its face value less any unamortized premium or plus any unamortized discount.
C) The carrying amount of a bond is its face value plus any unamortized premium or less any unamortized discount.
D) The carrying amount of bonds issued at a premium will initially be lower than the face value.
Carrying Amount
The monetary value of an asset or liability as recorded on the balance sheet, factoring in depreciation, amortization, or impairment.
Unamortized Premium
The portion of a bond premium that has not yet been amortized (gradually written off) over the period of the bond's life.
Face Value
The nominal or dollar value printed on a security or a bond, representing its legal value.
- Analyze the impact of bond issuance conditions on financial statements, including premium and discount situations.
Verified Answer
JD
Jasleen DhillonJul 01, 2024
Final Answer :
C
Explanation :
The carrying amount of a bond is indeed its face value plus any unamortized premium or less any unamortized discount. This reflects the bond's book value over time as the premium or discount is amortized.
Learning Objectives
- Analyze the impact of bond issuance conditions on financial statements, including premium and discount situations.