Quick Answer: How would the balance of the discount on bonds payable account usually be reported in the balance sheet?

The balance in the discount on bonds payable account would usually be reported on the balance sheet in the: Current assets section.

How do you report the discount on bonds payable account on the balance sheet?

The premium or the discount on bonds payable that has not yet been amortized to interest expense will be reported immediately after the par value of the bonds in the liabilities section of the balance sheet.

What does the balance in the discount on bonds payable account represent?

The discount on bonds payable is the difference between the cash received and the maturity value of the bonds and represents additional interest expense to Lighting Process, Inc. (the company that issued the bond).

How are bonds payable reported on the balance sheet?

Bonds payable is a liability account that contains the amount owed to bond holders by the issuer. This account typically appears within the long-term liabilities section of the balance sheet, since bonds typically mature in more than one year.

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How do you record bond discount?

Accounting for Bond Amortization

If there was a discount on bonds payable, then the periodic entry is a debit to interest expense and a credit to discount on bonds payable; this has the effect of increasing the overall interest expense recorded by the issuer.

How should discount on bonds payable be reported on the financial statements premium on bonds payable?

Discount (premium) on bonds payable should be reported in the balance sheet as a direct deduction from (addition to) the face amount of the bond. Both are liability valuation accounts. … The effective-interest method results in an increasing or decreasing amount of interest each period.

Is discount on bonds payable a liability?

A contra liability account that reports the amount of unamortized discount associated with bonds that are outstanding. The discount on bonds payable originates when bonds are issued for less than the bond’s face or maturity amount.

What does the balance in the discount on bonds payable account represent quizlet?

The account Discount on Bonds Payable actually represents interest expense and will be amortized over the life of the bond. … When a company sells bonds, the bondholders are permitted to vote for the board of directors.

Is discount on bonds payable an asset?

Although Discount on Bonds Payable has a debit balance, it is not an asset; it is a contra account, which is deducted from bonds payable on the balance sheet.

When bonds are issued at a discount the bonds payable account is credited for?

When bonds are issued at a discount, the bonds payable account is credited for the proceeds from the issue. If a long-term note payable has a stated interest rate, that rate should be considered to be the effective rate. Amortization of bond premium reduces the balance in bonds payable.

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