The combined aggregate of $17,500,000 of maturities and sinking fund requirements detailed by year should be disclosed. Only maturities totaling $9,500,000 for the next five years detailed by year need to be disclosed.ĭ. Only sinking fund payments totaling $8,000,000 for the next five years detailed by year need to be disclosed.Ĭ. Awards 2022 2022 3,068 Evan Peters Photos and Premium High Res Pictures. In the notes to its December 31, year 1 balance sheet, how should Witt report the above data?ī. New Orleans Pelicans Meet and Greet Tickets will include essential passes like. has outstanding at December 31, year 1, two long-term borrowings with annual sinking fund requirements and maturities as follows: By the time the bonds mature at 1/2/Y7, the entire discount would have been amortized under both methods, so the carrying amount would be the same for both methods.ġ9. After one year, the incorrect use of the straight-line method would overstate the carrying amount of the bonds since more discount would have been amortized than under the effective interest method. Under the straight-line method, discount amortization is constant each period. Therefore, under the effective interest method, the discount amortization amount increases yearly. When bonds are issued at a discount, the carrying amount increases each year, so interest expense increases each year, which causes a larger difference between interest expense and interest paid. The difference between interest expense and cash interest paid is discount amortization. Cash interest paid equals the face value of the bonds multiplied by the stated rate of interest. (b) Using the effective interest method, interest expense is computed as the carrying amount of the bonds multiplied by the effective rate of interest.

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