Respuesta :
The Bond is issued for a period of seven months.
What are bonds?
- A bond is a type of security used in finance where the issuer (debtor) owes the holder (creditor) a debt and is required, depending on the terms, to repay the bond's principal (i.e., the amount borrowed) at the bond's maturity date as well as interest (referred to as the coupon) over a predetermined period of time. Interest is often paid at predetermined times (semiannual, annual, and less frequently at other periods)
Solution:
Given,
A bond issue on June 1, year 1
Interest payment dates of April 1 and October 1
We need to calculate:
Bond interest expense for the year ended December 31, 2016
Since we know that interest expense is for a given time period, the bonds were outstanding during the reporting period.
Therefore,
Bonds issued on June-1, year 1
Months Total = June to December = seven months
Since, Interest payment date is October 1, year 1.
This means interest will be paid on this date.
Also, for the year will be included in the interest expense along with the accrued interest for the remaining 4 months (October 1, year 1 to December 31, year 1).
Hence, the Bond interest expense for the year ended December 31, year 1, is for a period of seven months.
To learn more about Bonds with the given link
https://brainly.com/question/25596583
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