In this lesson, Nick Palazzolo, CPA, demystifies the concept of bond issuance at a premium, illustrating the process with clear examples. He begins by explaining how bonds can be issued at a price above their face value, identified as 103 in this scenario, signifying a premium. Through step-by-step computation, Nick breaks down how to calculate the premium on bonds and then compares this to the face value. Additionally, he expertly clarifies the journal entry adjustments needed when dealing with bond premiums, as opposed to bond discounts, emphasizing that despite the differences, the underlying accounting process remains consistent. This explanation shows how the carrying value of the bonds is adjusted over time, ensuring a solid understanding of the premium bonds concept.
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