[EuroAddict]

On June 30, Huff Corp. issued at 99, 1,000 of its 8%, $1,000 bonds. The bonds were issued through an underwriter to whom Huff paid bond issue costs of $35,000. On June 30, Huff should report the bond liability at:

A.

$955,000.

B.

$990,000.

C.

$1,000,000.

D.

$1,025,000.

The correct answer is B, $990,000. Why isn’t the bond liability $1,000,000? This was my thinking:

cash 990.000

disc 10,000

Bond payable 1,000,000

The answer is probably staring at me but I’ve done over 200 Q’s today so I’m a little tired. lol

-----------------------------
BEC - 77, 03/2015 (first try)
FAR - 79, 05/2015 (second try)
REG - 83, 12/2015 (first try)
AUD - 84, 03/2015 (first try)

I got 99 problems but the CPA ain't one.

[EuroAddict]

I might have figured it out. Is it b/c they are asking for bond liability and NOT bond liability net of discount?

-----------------------------
BEC - 77, 03/2015 (first try)
FAR - 79, 05/2015 (second try)
REG - 83, 12/2015 (first try)
AUD - 84, 03/2015 (first try)

I got 99 problems but the CPA ain't one.

[jaxon1024]

You always report the liability with the discount or premium included. The wording can be confusing but anytime the question asks for the carrying value of a bond liability always include the discount or premium, as this is how it is shown on the balance sheet.

Reg 85 (11-21-14)
Aud 93 (1-17-15)
Bec 89 (2-27-15)
Far 92 (5-7-15)

Becker Self Study and Wiley Test Bank

[Author]

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