When does a premium on bonds payable occur?

When does a premium on bonds payable occur?

Solutions

Expert Solution

Step 1: Definition of bond

Bonds are long-term debt where a company raises money from investors.

Step 2: Occurrence of compensation on bonds.

Premium bonds' premium occurs when the stated interest rate is more than the market interest rate. If the market rate is less than the effective interest, the investor pays extra to reduce this gap

The stated interest rate is an interest that the issuer of the bonds provides.

Sahil Dangi answered 1 year ago

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