Brimfest Corporation issued $ 2 400 000 , 10 -year, 6 % bonds for $ 2 352 comma 000 on January 1, 2019. Interest is paid semiannually on January 1 and July 1. The corporation uses the straight-line method of amortization. Brimfest 's fiscal year ends on December 31. The amount of discount amortization on July 1, 2019 , would be:

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Business

Adyson Mahoney

18 May, 19:38

Brimfest Corporation issued $ 2 400 000 , 10 -year, 6 % bonds for $ 2 352 comma 000 on January 1, 2019. Interest is paid semiannually on January 1 and July 1. The corporation uses the straight-line method of amortization. Brimfest 's fiscal year ends on December 31. The amount of discount amortization on July 1, 2019 , would be:

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Natalie · Answer 1

The bond amortization on July 1,2019 is $2,400

Explanation:

discount on bond issuance = Face value of the bond-issue price

face value of the bond is $2,400,000

issue price is $2,352,000

Discount on bond issuance=$2,400,000-$2,352,000

=$48000

annual bond amortization=discount on the bond/years to maturity

years to maturity is 10 years

annual bond amortization=$48,000/10

=$4,800

However six-month amortization=$4800*6/12

=$2,400