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Bonds, original issue dates and interest calculations
Asked May 1, 2009, 05:09 PM
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2 Answers This is a strange question. I do know how to calculate bond interest payments, but I never saw this before. ABC Company issues 100,000 of 10% (paid semiannually) stock on April 1st, 2009 @ face value. The bonds are dated January 1, 2009 (essentially backdated) and mature on January 1, 2011. How do I calculate the total interest for the year ending December 31,2009? From the issue date April 1 or from the date on the bond...January 1? Help.  |
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| The total interest for the year will be from the issue date, because that's the date they borrowed the money from the bondholders and therefore what they would have as an interest liability. If all you need is the interest expense for the year, that's it. Doing the entries is a different matter, but you haven't said what you need to do with this. | ||||
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