Question

On June 30, 2020, Ivanhoe Company issued $3,810,000 face value of 16%, 20-year bonds at $4,956,520,...

On June 30, 2020, Ivanhoe Company issued $3,810,000 face value of 16%, 20-year bonds at $4,956,520, a yield of 12%. Ivanhoe uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31.

Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2021, balance sheet. (Round answers to 0 decimal places, e.g. 38,548.)

Ivanhoe Company
Balance Sheet

                                                                      December 31, 2021For the Year Ended December 31, 2021For the Quarter Ended December 31, 2021

                                                                      Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity

$

                                                                      CashBad Debt ExpensePremium on Bonds PayableInterest PayableLoss on Redemption of BondsDiscount on Notes PayableInterest ExpenseBook Value of Bonds PayableNotes ReceivableNotes Payable

$

Homework Answers

Answer #1
Semi annual cash interest = 3810,000*16%*6/12 = 304800
Period Cash int. Int. Exp. Premium Unamortized Carrying
Amortized Premium Value of bonds
30.06.20 1146520 4956520
31.12.20 304800 297391 7409 1139111 4949111
30.06.21 304800 296947 7853 1131258 4941258
31.12.21 304800 296475 8325 1122933 4932933
Balance Sheet (extract) as at 31.12.21
Bonds payable 38,10,000
Add: Unamortized premium 11,22,933
Net bonds payable 49,32,933
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