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7 February, 13:00

Any unamortized premium should be reported on the balance sheet of the issuing corporation as

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  1. 7 February, 13:01
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    Answer:It should be an addition to the face amount of the bonds in the liability section. This is because a premium on a bond investment made is usually recorded in the account for investment and amortized over it's known useful life
  2. 7 February, 13:25
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    an addition to the face amount of the bonds in the liability section

    Explanation:

    When a bond is sold at a premium, it means that its market price was higher than its face value, e. g. face value = $100, market value = $105 results in a $5 premium.

    the journal entry for this example should be:

    Dr Cash 105

    Cr Bonds payable 100

    Cr Premium on bonds payable 5

    Both bonds payable and premium on bonds payable are liability accounts.
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