Problem:
Webb Company has outstanding a 7% annual, 10-year, $100,000 face value bond that it had issued several years ago. It originally sold the bond to yield 6% annual interest. Webb uses the effective interest rate method to amortize the bond premium. On June 30, 2014, the outstanding bond’s carrying amount was $105,000.
Required:
1. What amount of unamortized premium on the bond should Webb report in its June 30, 2015, balance sheet?