Interest Expense

 Effective rate yung ginagamit

Year of Issuance (e.g Year 1)

Initial measurement xx

Times: Effective Interest Rate (effective int.) x%

Interest Expense - Year 1 xx

Following the Year of Issuance (e.g. Year 2)

Initial measurement, CA Beg. of the Year 1 xx

Times: 1 + Effective Interest Rate x%

Less: Nominal Interest (xx)

Carrying amount, CA Beg. of the Year 2 xx

Times: Effective Interest Rate x%

Interest Expense - Year 2 xx

Payment Stage

Step By Step Procedure

1. Retirement price of the bonds payable + Interest payable (Unpaid)

2. Carrying amount of the bonds (Amortized cost)
3. Gain or loss on retirement

Step 1: Allocate the retirement price to: (1) retirement price and (2) retirement of interest
payable

To compute Retirement of Interest:

Principal retired bonds xx

Nominal interest rate x%

Months paid xx/12

Retirement of interest xx
  Yung matitira yun yung retirement price of bonds

Interest payable retired

Principal amount (retired portion) xx

Times: nominal interest rate x%

Times: months interest unpaid x/12

Retirement of interest payable xx

Step 2: Compute the carrying amount (CA) of bonds at the retirement date

Full retirement:

Initial measurement xx

Times: 1 + Effective Interest Rate x%

Less: Nominal Interest (xx)

Carrying amount @ retirement xx

Partial retirement:

Initial measurement xx

Times: 1 + Effective Interest rate xx

Less: Nominal Interest (xx)

Carrying amount, @ retirement xx

Times: Portion of bonds retired xx

Carrying amount, retired bonds xx

Gain

Retire price < CA Bonds

Loss

Retire price > CA Bonds

Carrying amount, retired bonds xx

Less: Retirement price of bonds (xx)

Gain or (loss) on retirement x(x)