Question

If the Bonds Payable account has a balance of $900,000 and the Discount on Bonds Payable account has a balance of $120,000, what is the carrying value of the bonds?

Carrying value $________.

Answer 1

Carrying value = $780000

Step-by-step explanation:

The carrying value of a bond is the difference between the face value of a bond less any unamortized discounts on the bond or add any unamortized premiums on the bond. As the bond in the question is a discount bond, the carrying value can be calculated as follows,

Carrying value - Discount bond = Face value - Unamortized Discount on bond

Carrying value = 900000 - 120000

Carrying value = $780000