会计学原理-约翰·J·怀尔德版-上海交通大学-14

In

this

chapter,

we

will

learn

about

issuing

bonds

at

par,

at

a

discount,

and

at

a

premium.

We

also

learn

about

various

waysto

structure

thepayments

on

notes

payable.Chapter

14©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinLong-Term

LiabilitiesIn

this

chapter,

you

will

learn

the

following

conceptual

objectives:C1:

Explain

the

types

and

payment

patterns

of

notesC2:

Appendix

14A:

Explainand

compute

the

present

valueof

an

amountto

be

paid

ata

future

date

C3:

Appendix

14C:

Describe

the

accrual

of

bond

interest

when

bond

payments

do

not

alignwith

accounting

periodsC4:

Appendix

14D:

Describe

the

accounting

for

leases

and

pensionsContents©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinBonds❏

Characteristics

of

Bonds❏

Bond

Price❏

Par

value

Bond❏

Discount

Bond❏

Premium

Bond❏

Bond

RetirementLong-term

Note

PayableDecision

Analysis:❏

Debt-to-Equity

RatioIn

this

chapter,

you

will

learn

the

following

conceptual

objectives:C1:

Explain

the

types

and

payment

patterns

of

notesC2:

Appendix

14A:

Explainand

compute

the

present

valueof

an

amountto

be

paid

ata

future

date

C3:

Appendix

14C:

Describe

the

accrual

of

bond

interest

when

bond

payments

do

not

alignwith

accounting

periodsC4:

Appendix

14D:

Describe

the

accounting

for

leases

and

pensionsConceptual

Learning

Objectives©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinC1:

Explain

the

types

and

payment

patterns

of

notesC2:

Appendix

14A:

Explain

and

compute

the

presentvalue

of

an

amount

to

be

paid

at

a

future

dateC3:

Appendix

14C:

Describe

the

accrual

of

bondinterest

when

bond

payments

do

not

align

withaccounting

periodsC4:

Appendix

14D:

Describe

the

accounting

forleases

and

pensionsIn

this

chapter,

you

will

learn

the

followinganalytical

objectives:A1:

Compare

bond

financingwith

stock

financingA2:

Assess

debt

features

and

their

implicationsA3:

Compute

the

debt-to-equity

ratio

and

explain

its

useA1:

Comparebond

financing

with

stockfinancingA2:

Assess

debt

features

and

theirimplicationsA3:

Compute

the

debt-to-equity

ratio

andexplain

its

use©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinAnalytical

Learning

ObjectivesIn

this

chapter,

you

will

learn

the

following

procedural

objectives:P1:

Prepare

entries

to

record

bond

issuance

and

bond

interestexpenseP2:

Compute

and

record

amortization

of

bond

discountP3:

Compute

and

record

amortization

of

bond

premiumP4:

Record

the

retirement

of

bondsP5:

Prepare

entries

to

account

for

notesP1:

Prepare

entries

to

record

bond

issuanceand

bond

interest

expenseP2:

Compute

and

record

amortization

of

bonddiscountP3:

Compute

and

record

amortization

of

bondpremiumP4:

Record

the

retirement

of

bondsP5:

Prepare

entries

to

account

for

notes©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinProcedural

Learning

ObjectivesThere

are

several

advantages

for

issuing

bonds

instead

of

stock.

Companies

issue

bonds

because

it

is

a

way

to

raise

needed

capital

withoutsacrificing

ownership

in

the

company.

The

interest

on

bonds

is

tax

deductible,

thereby

reducing

the

actual

taxes

paid

by

the

company.

Issuingbonds

can

increase

the

return

on

equity

if

the

company

earnsa

higher

return

on

the

borrowed

funds

than

it

pays

in

interest.Bonds

do

not

affectstockholder

control.Interest

on

bonds

istax

deductible.Bonds

can

increasereturn

on

equity.Advantages

of

BondsA1©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinOn

the

other

sideof

the

issue,

there

are

some

disadvantages

to

issuing

bonds.

Bonds

require

regular

payment

of

interest

and

repayment

of

theprincipal

borrowed.

These

required

cash

payments

maybe

difficult

if

a

company

faces

tight

cash

flows.

Bonds

can

also

decrease

the

return

onequity

if

the

company

pays

more

in

interest

than

it

earns

on

the

borrowed

funds.Bonds

require

payment

of

bothperiodic

interest

and

par

valueat

maturity.Bondscan

decrease

return

onequity

when

the

company

paysmorein

interest

than

it

earns

ontheborrowedfunds.Disadvantages

of

BondsA1©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinBonds

are

securities

that

can

be

readily

bought

andsold.

A

large

number

of

bonds

are

traded

on

the

New

York

Exchange

and

the

AmericanExchange.

Since

bonds

are

bought

and

sold

in

the

market,

they

have

a

market

value,

or

price.

For

convenience,

bond

market

values

areexpressed

as

a

percent

of

their

par

value.Bond

market

valuesare

expressed

as

apercent

of

their

parvalue.Bond

Trading©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinA2When

an

underwriter

sells

bonds

to

a

large

number

of

investors,

a

trustee

monitors

the

bond

issue

and

protects

the

bondholders’

interests..

.

.an

investment

firmcalled

an

underwriter.The

underwriter

sellsthe

bonds

to.

.

.A

trusteemonitorsthe

bondissue.©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinA

company

sells

thebonds

to.

.

..

.

.

investorsBond

Issuing

ProceduresA1Bonds

are

debt.

They

are

similar

to

other

debts

a

company

issues.

However,

one

difference

is

that

state

and

federal

laws

govern

bondissues.

The

legal

document

identifyingthe

rights

and

obligations

of

both

the

bondholders

and

the

issuer

is

called

the

bond

indenture.

The

bondindenture

is

the

legal

contract

between

the

issuer

and

the

bondholders.On

the

issue

date,

the

bondholders

give

the

company

the

market

value,

or

selling

price

of

the

bond.

The

companygives

the

bondholdersabondcertificate.Bond

Certificateat

Par

ValueBond

Selling

PriceCorporationInvestors©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinBasics

of

BondsA1At

regularly

scheduled

dates

during

the

life

of

the

bond,

the

company

pays

the

bondholders

interest.

Interest

is

calculated

as

Bond

Par

Valuetimes

the

Stated

Interest

Rate

on

the

bond

times

the

lengthoftime

the

bond

has

been

outstanding

during

the

year.Just

like

all

interest

rates,

the

stated

interest

rate

is

expressed

on

an

annual

basis.

As

a

result,

in

this

slide,

we

can

assume

that

interest

paymentsare

made

annually

since

the

interest

payment

computation

does

not

haveatime

component

in

it.Bond

IssueDateBond

Interest

PaymentsBond

Interest

PaymentsCorporationInvestorsInterest

Payment

=Bond

Par

Value

*

Stated

Interest

RateBasics

of

BondsA1©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinAt

the

maturity

date,

the

company

pays

the

bondholders

the

bond’s

parvalue.Now,

let’s

see

how

to

account

for

a

bond

issue.Bond

IssueDateBondMaturityDateBond

Par

Valueat

Maturity

DateCorporation©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinInvestorsBasics

of

BondsA2At

regularly

scheduled

dates

during

the

life

of

the

bond,

the

company

pays

the

bondholders

interest.

Interest

is

calculated

as

Bond

Par

Valuetimes

the

Stated

Interest

Rate

on

the

bond

times

the

lengthoftime

the

bond

has

been

outstanding

during

the

year.Just

like

all

interest

rates,

the

stated

interest

rate

is

expressed

on

an

annual

basis.

As

a

result,

in

this

slide,

we

can

assume

that

interest

paymentsare

made

annually

since

the

interest

payment

computation

does

not

haveatime

component

in

it.Bond

Interest

PaymentsCouponPayment=Bond

Par

Value

*

Stated

Interest

RateBond

PricePresent

Value

of

a

BondA1Bond

IssueDateBond

MaturityDateMaturityPaymentC=couponpaymentn=numberof

paymentsi=marketinterest

rateM=value

at

maturity,

or

parvalue©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinKing

Company

issues

bondsat

par

value.

This

means

that

the

stated

interest

rate

on

the

bond

and

the

market

interest

rate

on

the

bond

areequal.

King’s

bonds

have

a

par

valueof

one

million

dollars,

a

stated

interest

rate

of

ten

percent

with

interest

payable

on

June

30th

and

December31st.

The

bonds

are

dated

January

1,

2008

and

mature

twenty

years

later

on

December31,

2027.On

the

issue

date,

King

would

debit

Cash

and

credit

Bonds

Payable

for

one

million

dollars.

The

Bonds

Payable

account

is

always

credited

for

thepar

value,

or

maturity

value,

of

the

bonds.Two

Important

TablesP1©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinKing

Company

issues

bondsat

par

value.

This

means

that

the

stated

interest

rate

on

the

bond

and

the

market

interest

rate

on

the

bond

areequal.

King’s

bonds

have

a

par

valueof

one

million

dollars,

a

stated

interest

rate

of

ten

percent

with

interest

payable

on

June

30th

and

December31st.

The

bonds

are

dated

January

1,

2008

and

mature

twenty

years

later

on

December31,

2027.On

the

issue

date,

King

would

debit

Cash

and

credit

Bonds

Payable

for

one

million

dollars.

The

Bonds

Payable

account

is

always

credited

for

thepar

value,

or

maturity

value,

of

the

bonds.Two

Important

TablesP1©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinIn

our

previous

examples,

we

provided

the

selling

price

of

the

bonds.

But

how

did

we

determine

those

prices?

To

compute

the

price

of

a

bond,we

apply

present

value

concepts.We

knowthe

following

information

related

to

the

bond:Par

value

to

be

received

at

maturity.Interest

payments

determined

using

the

stated

interest

rate.Number

of

interest

payment

periods.Market

rate

of

interest.Let’s

see

how

we

use

this

informationto

determine

the

price

of

a

bond.Calculate

the

issue

price

of

Rose

Inc.’s

bonds.Par

Value

=

$1,000,000Issue

Price

=

?Stated

Interest

Rate

=

10%Market

Interest

Rate

=

12%Interest

Dates

=

6/30

and

12/31Bond

Date

=

Jan.

1,

2008Maturity

Date

=

Dec.

31,

2012

(5

years)Present

Value

of

a

BondC2©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinThe

price

of

the

bond

is

made

upof

two

factors:○

The

present

valueof

the

par

value

paid

at

maturity.○

The

present

value

of

the

seriesof

interest

payments

over

the

life

of

the

bond.For

Rose,

the

par

value

is

one

million

dollars.

To

find

the

present

valueof

the

par

value,

we

can

use

the

Present

Value

of

One

Table

or

acalculator.

The

future

value

is

one

million

dollars,

the

time

is

ten

periods,

and

the

market

interest

rate

for

eachsemiannual

period

is

six

percent.

Ifwe

use

the

Present

Valueof

One

Table,

we

find

an

interest

factor

of

0.5584.

When

we

multiply

this

interest

factor

times

the

par

value

of

onemillion

dollars,

we

get

the

present

value.To

find

the

present

value

of

the

interest

payments,

we

can

use

the

Present

Valueof

an

Annuity

of

One

Table

or

a

calculator.

The

annuity

is

fiftythousand

dollars,

the

time

is

ten

periods,

and

the

market

interest

rate

for

each

semiannual

period

is

six

percent.

If

we

use

the

Present

Valueof

anAnnuity

of

One

Table,

we

find

an

interest

factor

of

7.3601.

When

we

multiply

this

interest

factor

times

the

interest

annuity

of

fifty

thousanddollars,

we

get

the

present

value.If

we

add

the

two

present

value

amounts

calculated

together,

we

get

the

sellingprice

of

the

bond.Present

Value

of

a

BondSemiannual

rate

=

6%

(Market

rate

12%

÷

2)Semiannual

periods

=

10

(Bond

life

5

years

×

2)$1,000,000

×

10%

×

½ =

$50,000C2©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinIn

this

example,

Rose

Companyis

issuingbonds

withapar

value

of

one

million

dollars,

astated

interest

rate

of

ten

percent

with

interest

payablesemiannually

onJune

thirtieth

and

December

thirty-first.

However,

the

market

interest

rate

on

the

issue

date

for

financial

instruments

withsimilarrisk

is

twelve

percent.Now,

if

our

bond

is

paying

ten

percent

and

the

market

is

paying

twelve

percent,

how

many

investors

will

want

to

buy

our

bonds?

None!

So,

wehave

to

make

our

bonds

more

attractive

by

reducing

the

sellingprice

to

make

up

the

difference

in

the

interest

rates.In

this

example,

Rose

Company

sells

its

bonds

for

92.6405%

of

its

par

value.

This

discount

in

the

selling

price

raises

the

effective

interest

ratethat

the

investors

will

earn

to

twelve

percent.Prepare

the

entry

for

Jan.

1,

2008,

to

record

thefollowing

bond

issue

by

Rose

Co.Par

Value

=

$1,000,000Stated

Interest

Rate

=

10%Market

Interest

Rate

=

12%}P2

Stated

interest

<

Market

interestInterest

Dates

=

6/30

and

12/31Bond

Date

=

Jan.

1,

2008Maturity

Date

=

Dec.

31,

2012

(5

years)Bond

price

=

7.360087*50,000+0.558395*1,000,000=926,399Issue

Price

=

92.640%

(rounded)

of

par

valueBond

Price

<

Par

Value,

Bond

will

sell

at

a

discount.©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinKing

Company

issues

bondsat

par

value.

This

means

that

the

stated

interest

rate

on

the

bond

and

the

market

interest

rate

on

the

bond

areequal.

King’s

bonds

have

a

par

valueof

one

million

dollars,

a

stated

interest

rate

of

ten

percent

with

interest

payable

on

June

30th

and

December31st.

The

bonds

are

dated

January

1,

2008

and

mature

twenty

years

later

on

December31,

2027.On

the

issue

date,

King

would

debit

Cash

and

credit

Bonds

Payable

for

one

million

dollars.

The

Bonds

Payable

account

is

always

credited

for

thepar

value,

or

maturity

value,

of

the

bonds.P1

Stated

interest

=

Market

interestKing

Co.

issues

the

following

bondson

January

1,

2008Par

Value

=

$1,000,000Stated

Interest

Rate

=

10%Market

Interest

Rate

=

10%Interest

Dates

=

6/30

and

12/31Bond

Date

=

Jan.

1,

2008Maturity

Date

=

Dec.

31,

2027

(20

years)Bond

price

=

17.159086*50,000+0.142046*1,000,000=

1,000,Bond

price

=

par

value©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinIn

this

example,

Rose

Companyis

issuingbonds

withapar

value

of

one

million

dollars,

astated

interest

rate

of

ten

percent

with

interest

payablesemiannually

on

June

30th

and

December

31st.

However,

the

market

interest

rate

on

the

issue

date

for

financial

instruments

with

similar

risk

iseight

percent.Now,

if

our

bond

is

paying

ten

percent,

and

the

market

is

paying

eight

percent,

how

many

investors

will

want

to

buy

our

bonds?

All

of

them!

So,we

can

increase

the

price

of

our

bonds

and

they

will

still

be

attractive

to

the

bond

investors.In

this

example,

Rose

company

sells

its

bonds

for

108.1145%

of

its

par

value.

This

premiumin

the

selling

price

reduces

the

effective

interest

ratethat

the

investors

will

earn

to

eight

percent.Prepare

the

entry

for

Jan.

1,

2008,

to

record

thefollowing

bond

issue

by

Rose

Co.Par

Value

=

$1,000,000Stated

Interest

Rate

=

10%}P3

Stated

interest

>

Market

interestMarket

Interest

Rate

=

8%

Interest

Dates

=

6/30

and

12/31Bond

Date

=

Jan.

1,

2008Maturity

Date

=

Dec.

31,

2012

(5

years)Bond

price

=

8.110896*50,000+0.675564*1,000,000=

1,081,10Issue

Price

=

108.111%

(rounded)

of

par

valueBond

Price

>

Par

Value,

Bond

will

sell

at

a

premium.©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinIn

almost

all

cases,

the

stated

(contract)

rate

and

the

market

rateof

interest

will

not

agree.

When

these

two

interest

rates

are

different,

it

mightmake

sense

to

you

for

us

to

just

change

our

stated

rate

to

equal

the

market

rate

and

then

everythingwould

be

fine.

Well,

we

can’t

dothat.

Remember

that

the

bond

certificate

lists

all

of

the

specifics

about

the

bond

includingthe

interest

rate.

Because

we

have

to

print

the

bondcertificates

in

advance,

we

are

stuck

having

to

pay

the

interest

printed

on

the

bond

certificate.The

only

thing

that

is

not

printed

on

the

bond

certificate

is

the

selling

price.

So,

the

issuing

company

and

the

bond

investors

come

to

an

agreementon

the

selling

price

that

incorporates

the

difference

in

the

stated

interest

rate

and

the

market

interest

rate.Bond

Discount

or

PremiumP1©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinKing

Company

issues

bondsat

par

value.

This

means

that

the

stated

interest

rate

on

the

bond

and

the

market

interest

rate

on

the

bond

areequal.

King’s

bonds

have

a

par

valueof

one

million

dollars,

a

stated

interest

rate

of

ten

percent

with

interest

payable

on

June

30th

and

December31st.

The

bonds

are

dated

January

1,

2008

and

mature

twenty

years

later

on

December31,

2027.On

the

issue

date,

King

would

debit

Cash

and

credit

Bonds

Payable

for

one

million

dollars.

The

Bonds

Payable

account

is

always

credited

for

thepar

value,

or

maturity

value,

of

the

bonds.King

Co.

issues

the

following

bonds

on

January

1,

2008Par

Value

=

$1,000,000Stated

Interest

Rate

=

10%Interest

Dates

=

6/30

and

12/31Bond

Date

=

Jan.

1,

2008MaturityDate

=

Dec.

31,

2027

(20

years)IssuingBonds

at

ParP1©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinOn

the

first

interest

payment

date,

Kingwould

debit

Bond

Interest

Expense

and

credit

Cash

for

fifty

thousand

dollars.

The

interest

was

calculatedas

Par

value

times

stated

rate

times

months

outstanding.Kingwill

actually

make

this

entry

every

six

months

until

the

maturity

date.$1,000,000

×

10%

×

½

year

=

$50,000This

entry

is

made

every

six

months

untilthe

bonds

mature.IssuingBonds

at

ParThe

entry

on

June

30,

2008,

to

record

thefirst

semiannual

interest

payment

is

.

.

.P1©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinOn

the

maturity

date,

Kingwill

repay

the

par

value

of

the

bonds

by

debiting

Bonds

Payable

and

crediting

Cash

for

one

million

dollars.

At

thistime,

the

debt

is

extinguished.On

Dec.

31,

2027,

the

bonds

mature,

KingCo.

makesthe

following

entry

.

.

.IssuingBonds

at

ParThe

debt

has

now

beenextinguished.P1©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinIn

almost

all

cases,

the

stated

(contract)

rate

and

the

market

rateof

interest

will

not

agree.

When

these

two

interest

rates

are

different,

it

mightmake

sense

to

you

for

us

to

just

change

our

stated

rate

to

equal

the

market

rate

and

then

everythingwould

be

fine.

Well,

we

can’t

dothat.

Remember

that

the

bond

certificate

lists

all

of

the

specifics

about

the

bond

includingthe

interest

rate.

Because

we

have

to

print

the

bondcertificates

in

advance,

we

are

stuck

having

to

pay

the

interest

printed

on

the

bond

certificate.The

only

thing

that

is

not

printed

on

the

bond

certificate

is

the

selling

price.

So,

the

issuing

company

and

the

bond

investors

come

to

an

agreementon

the

selling

price

that

incorporates

the

difference

in

the

stated

interest

rate

and

the

market

interest

rate.Bond

Discount

or

PremiumP1©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinIn

this

example,

Rose

Companyis

issuingbonds

withapar

value

of

one

million

dollars,

astated

interest

rate

of

ten

percent

with

interest

payablesemiannually

onJune

thirtieth

and

December

thirty-first.

However,

the

market

interest

rate

on

the

issue

date

for

financial

instruments

withsimilarrisk

is

twelve

percent.Now,

if

our

bond

is

paying

ten

percent

and

the

market

is

paying

twelve

percent,

how

many

investors

will

want

to

buy

our

bonds?

None!

So,

wehave

to

make

our

bonds

more

attractive

by

reducing

the

sellingprice

to

make

up

the

difference

in

the

interest

rates.In

this

example,

Rose

Company

sells

its

bonds

for

92.6405%

of

its

par

value.

This

discount

in

the

selling

price

raises

the

effective

interest

ratethat

the

investors

will

earn

to

twelve

percent.Prepare

the

entry

for

Jan.

1,

2008,

to

record

thefollowing

bond

issue

by

Rose

Co.Par

Value

=

$1,000,000Issue

Price

=

92.640%

of

par

valueStated

Interest

Rate

=

10%Market

Interest

Rate

=

12%Interest

Dates

=

6/30

and

12/31Bond

Date

=

Jan.

1,

2008Maturity

Date

=

Dec.

31,

2012

(5

years)IssuingBonds

at

a

Discount}Bond

will

sell

at

a

discount.P2©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinRose

will

receive

cash

of

nine

hundred

twenty

six

thousand,

four

hundred

five

dollars

from

the

bond

investors.

The

difference

between

the

parvalue

of

the

bonds

and

the

cash

price

received

is

the

discount

that

we

offered

the

bond

investors.Remember

that

the

whole

reason

we

offered

the

discount

is

becauseof

the

difference

between

the

stated

rate

and

the

market

rateof

interest.

As

a

result,

the

discount

represents

an

additional

interest

factor

that

will

be

amortized

to

Interest

Expense

over

the

life

of

thebond.

Amortizing

thediscount

will

increase

the

total

Interest

Expense

recorded

for

the

bond

to

equal

twelve

percent,

the

market

rate

of

interest.$1,000,000

*

92.6400%Amortizing

the

discount

increasesInterest

Expense

over

the

outstandinglife

of

the

bond.IssuingBonds

at

a

DiscountP2©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinOn

the

issue

date,

Rose

will

debit

Cash

for

the

amount

of

the

cash

proceeds,

credit

Bonds

Payable

for

the

par

value

of

the

bonds

issued,

anddebit

Discount

onBonds

Payable

for

the

difference

between

the

two.Discount

onBonds

Payable

is

a

contra-liability

account

and

has

a

normal

debit

balance.Contra-LiabilityAccountOn

Jan.

1,

2008,

Rose

Co.

would

record

thebond

issue

as

follows.IssuingBonds

at

a

DiscountP2©

The

McGraw-Hill

Companies,

Inc.,

2McGraw-Hill/IrwinOn

the

balance

sheet,

the

amountof

the

unamortized

discount

is

subtracted

from

the

par

value

of

the

bonds

to

arrive

at

the

current

carrying

valueof

the

bonds.Using

the

straight-line

method

to

amortize

the

discount,

Rose

will

divide

the

amountof

the

discount

by

the

number