Ch. 10

In the balance sheet, the account Premium on Bonds Payable is

Added to Bonds Payable

The contractual interest rate is always stated as an

Annual Rate

If the market interest rate is greater than the contractual rate, bonds will sell

At a discount

The total cost of borrowing is increased only if the

Bonds were issued at a discount

When a company retires bonds before maturity, the gain or loss on the redemption is the difference between the cash paid and the

Carrying value of the bonds

The selling price of a $10,000, 5-year bond, will be less than $10,000 if the

Contractual interest rate is less than the market interest rate

Unearned Rent Revenue is

Generally reported as a current liability

If the market rate is 10%, a $10,000, 12%, 10-year bond that pays interest annually would sell at an amount

Greater than face value

Each of the following accounts is generally reported as a long-term liability except

Interest Payable

Premium on Bonds Payable

Is considered to be a reduction in the cost of borrowing

The interest rate investors demand for loaning funds is the

Market interest rate

If there is a loss on bonds redeemed early, it is

Reported as an "Other Expense" on the income statement

The Loss on bond redemption is equal to

The excess of the redemption price over the carrying value of the bonds

Bond Interest Paid is

The same whether bonds sell at a discount or a premium

A corporation recognizes a gain or loss

When bonds are redeemed before maturity

The sale of bonds above face value

Will cause the total cost of borrowing to be less than the bond interest paid