[Anonymous]

Can someone help me on an example from Becker review, in chapter 5?

Are we allow to post materials from Becker on this website? Please help me, I been trying to figure out the bond issue at a discount/premium and I am totally lost.

Thank you.

[sarah210]

I doubt you should post the whole book, but people on this board help each other out with specific questions from Becker (or whatever program they are using) all the time.

REG- 53, 91
BEC- 88
FAR- 62, 85
AUD- 85

Ethics- 93

[stephw4763]

Is it a problem in the book or the homework questions? Let me know which one it is.

B- 82
A- 84
R- 67, 72, 78
F- 83

[Anonymous]

It's a problem in the book. In chapter 5, the example problem for bond discount.

Thanks

[stephw4763]

I forgot to check this when I got home from work. I'll check it out tonight and try to explain it!

B- 82
A- 84
R- 67, 72, 78
F- 83

[leafs43]

The bond section in becker is too abridged for the subject.

But I assume you're having trouble with the effective interest method.

For a discount, the goal is to write the book value up to the face amoutn at the end of the bond.

So take the book value (usually given to you) multiply by the market rate. Then subtract that from the stated interest payment (that's the stated rate times the face value.) Then subtract that number from the bond discount of the previous year and that will give you the current year's bond discount. You can keep doing this for the life of the bond and the bond discount will reach 0, while the bond's book value will keep increasing to the face value.

[Author]

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