On January 1, 2014, Osborn Inc. sold 12% bonds having a maturity value of $800,000 for $860,651.79,

Question:

On January 1, 2014, Osborn Inc. sold 12% bonds having a value of $800,000 for $860,651.79, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2014, and mature on January 1, 2019, with interest payable on January 1 of each year. The company follows IFRS and uses the effective interest method.
Instructions
(a) Prepare the journal entry at the date of issue.
(b) Prepare a schedule of interest expense and bond amortization for 2014 through 2017.
(c) Prepare the journal entry to record the interest payment and the amortization for 2014.
(d) Prepare the journal entry to record the interest payment and the amortization for 2016.
(e) If Osborn prepares in accordance with ASPE, can Osborn choose a different method of amortizing any premium or discount on its bonds payable? Explain your answer.
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