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I am taking the exam today and I found one confusing area when I reviewed my simulations:
so when there’s a bond issuance cost, we need to subtract it from the cash we received. for example:
DR Cash 82,000
DR Bond issuance cost 2,000
CR Bond payable 80,000
CR Premium on bond payable 4,000
My question is, when calculating the interest expense for the next upcoming period, do you use 84,000 or 82,000 as the base? Becker said you should use the ‘net carrying value’ as the base. There’s also a term ‘net carrying amount’ when we calculate the gain/loss on extinguishment. Are they different?
AUD: 64, 71, 73, 72, 78
FAR: 75 (expired), 79
BEC: 89
REG: 76FINGERS CROSSED
FAR - 75
AUD - 64/71
BEC - 85
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