[jeff]

FAR Resources:

Free FAR Notes & Audio – https://www.another71.com/cpa-exam-study-plan

FAR 10 Point Combo: https://www.another71.com/products-page/ten-point-combo

FAR Score Release: https://www.another71.com/cpa-exam-scores-results-release

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Anonymous]

Issuance date is when bonds begin accruing interest.

[AOCI]

This question throws me off all the time.

So since the bond was issued on 1/1, accrued interest would be three month right?

I may be wrong.

FAR-82!
REG-82 Again!
BEC-78!
AUD-84!

Done with the exam and LICENSED in VA as of 11/17/2015.

[AOCI]

This question throws me off all the time.

So since the bond was issued on 1/1, accrued interest would be three month right?

I may be wrong.

FAR-82!
REG-82 Again!
BEC-78!
AUD-84!

Done with the exam and LICENSED in VA as of 11/17/2015.

[wanxx043]

@Darcer

I guess I'm just confused how you would even have a bond dated a certain date if said bond hadn't been issued. But after doing some more problems, it looks like it affects the calculation of amortization too. I think I'm just overthinking it / going crazy.

Thanks for the help!

@AOCI, in the case above, there wouldn't be any interest included in the issuance price of the bond since like Darcer said, interest doesn't accrue until the company actually issues the bond.

REG - 7/2/12 - 89
BEC - 7/9/12 - 91
AUD - 5/13/13 - 87
FAR - 1/3/14 - 80

[wanxx043]

@Darcer

I guess I'm just confused how you would even have a bond dated a certain date if said bond hadn't been issued. But after doing some more problems, it looks like it affects the calculation of amortization too. I think I'm just overthinking it / going crazy.

Thanks for the help!

@AOCI, in the case above, there wouldn't be any interest included in the issuance price of the bond since like Darcer said, interest doesn't accrue until the company actually issues the bond.

REG - 7/2/12 - 89
BEC - 7/9/12 - 91
AUD - 5/13/13 - 87
FAR - 1/3/14 - 80

[NeverGiveUpCPA]

@kels417 – Good luck tomorrow…I hope you conquer FAR!!

[NeverGiveUpCPA]

@kels417 – Good luck tomorrow…I hope you conquer FAR!!

[Anonymous]

This is a word thing. let me look into this more

[Anonymous]

This is a word thing. let me look into this more

[Anonymous]

Can you clarify the question?

Most of the times on these types of questions, the purchaser has to pay in the accrued interest and then gets the full interest amount.

Looking more closely at your question, I think this is the situation. SO the purchaser would pay 3 months interest in above the purchase price.

[Anonymous]

Can you clarify the question?

Most of the times on these types of questions, the purchaser has to pay in the accrued interest and then gets the full interest amount.

Looking more closely at your question, I think this is the situation. SO the purchaser would pay 3 months interest in above the purchase price.

[Anonymous]

Yes, let me retract my initial statement. But I'm now not understanding the confusion as to the original question

Purchase:

DR cash

DR discount

CR Bonds Payable

CR Bonds Interest expense (this is what the buyer is paying in or 3 months interest )

Interest payment april

Dr Bonds Interest expense (6 months, give back the 3 you got plus the 3 months you owe)

Cr Cash

[Anonymous]

Yes, let me retract my initial statement. But I'm now not understanding the confusion as to the original question

Purchase:

DR cash

DR discount

CR Bonds Payable

CR Bonds Interest expense (this is what the buyer is paying in or 3 months interest )

Interest payment april

Dr Bonds Interest expense (6 months, give back the 3 you got plus the 3 months you owe)

Cr Cash

[thehip41]

For interest with the bonds question.

If Interest is paid on Jan 1 and July 1

and the bond is sold on April 1

You have a few things happening.

1. Bond price (present value calucation)

2. Discount/premium

3. PRE PAYING INTEREST.

In this situation, the buyer would have to pay the seller for 3 months of information.

So you have this:

cash (from bond proceeds)

discount on bonds

Cash (from interest)

Bond Payable

Liability (cash owed to buyor)

Then when interest is paid

Interest expense 300

Liability 300

cash 600

Assuming Interest of $600 for each 6 months.

FAR - 83
AUD - 73 92
BEC - 83
REG - 88

Licensed CPA in the state of Michigan

[thehip41]

For interest with the bonds question.

If Interest is paid on Jan 1 and July 1

and the bond is sold on April 1

You have a few things happening.

1. Bond price (present value calucation)

2. Discount/premium

3. PRE PAYING INTEREST.

In this situation, the buyer would have to pay the seller for 3 months of information.

So you have this:

cash (from bond proceeds)

discount on bonds

Cash (from interest)

Bond Payable

Liability (cash owed to buyor)

Then when interest is paid

Interest expense 300

Liability 300

cash 600

Assuming Interest of $600 for each 6 months.

FAR - 83
AUD - 73 92
BEC - 83
REG - 88

Licensed CPA in the state of Michigan

[Author]

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