The carrying (book) value of a bond payable is the par value of the bonds plus...

The carrying (book) value of a bond payable is the par value of the bonds plus any discount or minus any premium.

True or False

Expert Solution

Answer

The statement is FALSE
This is because, the carrying value of a bond payable is the par value of the bond MINUS (not plus) any discount or PLUS (not minus) any premium.
For calculating the carrying value, Discount is deducted (not added) from par value and Premiums are Added (not deducted) to the Par Value.
Examples:

In case of Discount---

Bonds Payable [Face Value = Par Value]	$ 1,000,000.00
Less: Discounts on Bonds Payable	$ 20,000.00
Carrying Value of Bonds Payable	$ 980,000.00

In case of Premium—

Bonds Payable [Face Value = Par Value]	$ 1,000,000.00
Add: Premium on Bonds Payable	$ 20,000.00
Carrying Value of Bonds Payable	$ 1,020,000.00

ekkarill92 answered 1 year ago

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