Question

The carrying value of a bond from the issuing corporation's standpoint will always move towards to its face value, regardless of whether the bond is issued at a premium or a discount.

true

false

Answer 1

If the bond is issued at discount, the carrying value will be less than the face value and at maturity, the carrying value equals it's face value.

If the bond is issued at premium, the carrying value will be more than the face value and at maturity, the carrying value equals it's face value.

So the carrying value of a bond from the issuing corporation's standpoint will always move towards to its face value, regardless of whether the bond is issued at a premium or a discount.

The answer is True.