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Hi, anyone know this? the bond issue cost no longer show as deferred charges??
Can anyone please kindly confirm?? thank you in advance!!!
The following costs were incurred in connection with the issuance of bonds by Hub Corp.:
Printing and engraving $5,000
Legal and accounting $100,000
Commissions $180,000How much should be treated as a deferred charge to be amortized over the life of the bonds?
A. $0
B. $100,000
C. $280,000
you chose D. $285,000Explanation
The correct answer is A. The category of “bond issue costs” includes legal, accounting, other professional fees, commissions, engraving, printing, registration, and promotion costs. Bond issue costs are no longer shown as a deferred charge, they must now be shown as a deduction of the bond payable and amortized over the life of the bond, on a straight-line basis. After the bond issue costs are amortized, the amortized amount will reduce the balance of the bond issue costs, which are deducted from the bonds payable.Since bond issue costs are no longer shown as a deferred charge, the answer is $0.
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