On December 31, Year 1, Arnold, Inc., issued $200,000, 8% serial bonds, to be repaid in the amount of $40,000 each year. Interest is payable annually on December 31. The bonds were issued to yield 10% per year. The bond proceeds were $190,280 based on the present values at December 31, Year 1, of the five annual payments as follows:

(省略)

Arnold amortizes the bond discount by the interest method. In its December 31, Year 2, balance sheet, at what amount should Arnold report the carrying amount of the bonds?
A. $139,380
B. $149,100
C. $150,280
D. $153,308


前提

Serial bonds に関する出題。

Serial bonds は、簡単に言うと principal の返済が 分割払いになるもの。

“be repaid in the amount of $XXX each year”

利息計算は effective interest method.

 

問われていること

December 31, Year 2 の B/S 上の carrying amount of the bonds の価格。

 

本問について

01.

まず、Dec 31, Y1 における issuance of bonds の entry.

Dr.
Cash  190,280
Discount  9,720 =plug=

Cr.
Bonds payable 200,000

 

Dr. Cash 190,280 は問題文より(Carrying Value)。

Cr. Bonds payable 200,000 は、bond の face amount. INVARIABLY!

plug の 9,720 は discount として debited.

 

02.

次に、Dec 31, Y2 における Interest expense を求める entry.

Dr.
Interest expense 19,028

Cr.
Cash 16,000
Discount 3,028 =plug=

 

➡︎ Interest expense = Carrying Value * Yield 
=190.280 * 10% = 19,028

➡︎ Cash = Face amount * coupon rate
=200,000 * 8% = 16,000

3,028 is debited as a plug (amortized).

 

03.

Dec 31, Y2 における repayment of principal の entry.

Dr.
Bonds payable 40,000

Cr.
Cash 40,000

 

どちらも本文より(”to be repaid in the amount of $40,000 each year”)。

 

解答

Dec 31, Year 2 における B/S 上での bond の carrying amount.

Beginning CV on Dec 31, Y2 = 190,280
Add: amortization of discount = 3,028
Less: principal repaid = (40,000)

CV on Dec 31, Y2 = 153,308

 

Things to memorize

➡︎ Interest expense = Carrying Value * Yield 

➡︎ Cash = Face amount * coupon rate