Why the effective interest method is used for amortizing


On July 1, 2013 Dipco Bonds issued 750, 10-year $1000 par value bonds paying 6% meanwhile other bonds in the market of similar riskiness in the market are yielding 5%. The bonds pay annual interest on June 30th each year. The effective interest method is used for amortizing the premiums or discounts on the bonds issues. This is a calendar year reporting entity. Provide all of the 2013 and 2014 journal entries for Dipco related to the bond issue. Provide the balance sheet carrying amounts and classification for these bonds for 12/31/13 and 12/31/14.

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Accounting Basics: Why the effective interest method is used for amortizing
Reference No:- TGS0679110

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