HKUST Inc. issued a bond on January 1^st, 2019 with a market interest rate (“yield”) of 11%. However, HKUST Inc. decided to pay a coupon rate of 9%. The “face-value” of the bond was 10,000 dollars. This bond will be due on December, 31^st, 2020 and will be paid semi-annually.

Required: Record the above bond transaction with a) straight-line method and b) effective interest method. Explain their differences.

Answer rating: 100% (QA)

To record the bond transaction we need to consider both the straightline method and the effective interest method a StraightLine Method Under the stra... View the full answer