[jdl]

Please see below (I don’t understand why the 40,000 accrued interest gets deducted from the bond value). Thanks!

On July 1, 2012 York Co purchased as a long term investment 1,000,000 of Park Inc 8% bonds for 946,000 including accrued interest of $40,000. The bonds were purchased to yield 10 % interest. The bonds mature on January 1, 2019 and pay interest annually on January 1. York uses the effective interest method of amortization. In it’s Dec 31 2012 balance sheet what amount should York report as investment in bonds?

[Anonymous]

Because acrrued interest isn't a part of the carrying value of the bond:)

[Author]

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