Reference no: EM132923706
Question - On January 1, 2020, Osborn Inc. sold 12% bonds having a maturity of $800,000 that provides the bondholders with a 10% yield. The bonds are dated January 1, 2020 and mature on January 1, 2025 with interest payable semi-annually on January 1 and July 1 of each year. The company follows IFRS and uses the effective interest method. Round calculations to the nearest dollar.
Instructions -
1) Prepare the journal entry at the date of issue.
2) Prepare a schedule of interest expense and bond amortization for 2020 through 2023.
3) Prepare the journal entries to record the interest payment and the amortization for 2020.
4) Prepare the journal entries to record the interest payment and amortization for 2022.
5) Assume that all the issued bonds are repurchased on July 1st, 2022 for $837,000. Prepare the journal entry to record this transaction.
If Osborn prepares financial statements in accordance with ASPE, can Osborn choose a different method of amortizing any premium or discount on its bonds payable? Explain your answer.
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