On January 1,2021, Apple Company issued $840,000 of 8%,10-year bonds for 97.

On January 1,2021, Apple Company issued $840,000 of 8%,10-year bonds for 97. Apple retired all of these bonds on January 1,2022, at 102. If Apple uses the straight-line amortization, how much loss should be recognized on this bond retirement?

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Expert Solution

Loss on Issue of Bonds = Face Value * Discount %

= $ 840000 * 3%

= $ 25200

Loss on Retirement = Face Value * Premium

= $ 840000 * 2%

= $ 16800

Loss shall be amortized = $ 25200+ $ 16800

= $ 42000

Pls comment, if any further assistance is required.

jeff jeffy answered 1 year ago

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