Homework Answers
Bonds Face Value = $455,000
The bonds are issued at a Premium at 103%
So, Issue price = $455,000*103% =455000*103/100 = $468,650
Premium on Bonds = Issue Price - Face Value = $468650 - $455000 = $13,650
Assuming straight line method of amortization,Number of Interest payments (5 years x 2) = 10 interest periods.
Premium to be amortized per Interest payment is = 13650/10 = $1,365
Write the answer in negative as here is premium on bond therefore, answer = -$1365
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