COMMERCE 1AA3 Study Guide - Final Guide: Amortization Schedule, Interest Expense, Current Asset

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 1AA3
• Professor: Emad Mohammad

Document Summary

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 point of the amortization schedule is to amortize premiums and discount to zero by the end of the bond term (by maturity). At that point, the balance of premiums and discounts will be zero, and thus the carrying value will be equal to the face value. True- is it is paid off with long term then it would make it false. False- the cash received is exactly the same as the note. True- if you are paying it off with long term anything then it is no longer current. We consider this a current asset if they intend to pay it off. In this case the intention is to pay it off with equity. False- that"s why we have premiums and discounts.