Please help me decide True or False for the following statements regarding bond premiums and discounts. When the contractual interest rate is greater…
Please help me decide True or False for the following statements regarding bond premiums and discounts.
When the contractual interest rate is greater than the market interest rate, the bonds will be issued at a discount.
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Order Paper Now2. When the contractual interest rate equals the market interest rate, the bonds will be issued at face value. –
3. If the net book value of bonds payable is lower than the balance of the bond payable ledger account, the bonds were issued at a premium.
4. Amortization of a bond premium reduces the net book value of bonds payable.
5. Amortization of a bond discount increases the net book value of bonds payable. –
6. The market interest rate rather than the contractual interest rate is paid in cash to investors each interest period.
7. The straight line method amortizes an equal dollar amount each interest period.
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