On January 1,2015 when the effective interest rate was 12%,Philips Co.issued bonds with a maturity value of $200,000.The stated rate of interest is 12% and the bonds pay interest semi-annually.Philips Co.paid $2,000 in bond issue costs on this date.Under IFRS the bonds will be recorded on the January 1,2015 balance sheet of Philips Co.at
A)$200,000.
B)$202,000.
C)$198,000.
D)Cannot be determined based on the information provideD.

Question

Quizplus · Accepted Answer

Under IFRS bond issues costs are recorded as a reduction in the proceeds received.The result is the effective interest rate will be higher (fewer dollars received but contractual payments are the same).

On January 1,2015 When the Effective Interest Rate Was 12%,Philips