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Financial Accounting

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Presentation of Premium on Bonds Payable for the 2nd year

FINACT-JEANVY

Smith and Smith Investment Co. issued a 10-year \$10,000,000 bond on 1/1/2015 at 105 with a stated interest rate of 5%. Assume that any premium or discount was amortized by using the straight-line method.

On 12/31/2016, what would be presented on the Balance Sheet related to this bond?

A

Bonds Payable \$10,500,000

B

Bonds Payable \$10,000,000 and Premium on Bonds Payable \$550,000

C

Bonds Payable \$10,000,000 and Premium on Bonds Payable \$450,000

D

Bonds Payable \$10,000,000 and Premium on Bonds Payable \$400,000