Professional Documents
Culture Documents
Fair Value is equal to the Present Value of the future cash payments to settle the bond
Sample
March 1 2020
Sold P5,000,000.00 bond @ its face amount
Interest is 12% payable semi annually every Mar1 and Sept1
Mar1 2020
Cash 5,000,000.00
BP 5,000,000.00
Sept1 2020
Interest Exp 300,000.00
Cash 300,000.00
Dec31 2020
Interest Exp 200,000.00
Interest Payable 200,000.00
Mar1 2021
Interest Exp 100,000.00
Interest Pay
Cash 300,000.00
June 1 2020
Sold P5,000,000.00 bond @ 97
Interest is 12% payable semi annually June1 and Dec1
Mature in 5 years
June1 2020
Cash 4,850,000.00
Discount on Bonds 150,000.00
BP 5,000,000.00
Dec1 2020
Interest Exp 300,000.00
Cash 300,000.00
Dec31 2020
Interest Exp 50,000.00
Interest Payable 50,000.00
Dec31 2020
Interest Exp 17,500.00
Discount on BP 17,500.00
June1 2021
Interest Exp 250,000.00
Interest Pay 50,000.00
Cash 300,000.00
April 1 2020
Sold P5,000,000.00 bond @ P5,228,000.00 plus accrud interest
Dated Jan 1 2020
Interest is 12% payable semi annually Jan1 and Jul1
Mature in 5 years
April1 2020
Cash 5,378,000.00
Accrued Int Payable 150,000.00
Premium on BP 228,000.00
Bonds Payable 5,000,000.00
Premium on BP 36,000.00
Interest Expense 36,000.00