Bonds are issued on June 1 that have interest payment dates of April 1 and October 1. Bond interest expense for the year ended December 31, 2009, is for a period of:
A)Three months.
B)Four months.
C)Six months.
D)Seven months.The interest expense is for the time the bonds were outstanding during the reporting period - 7 months in this case.

Question

Quizplus · Accepted Answer

Bond interest expense is calculated based on the time period during which the bonds were outstanding. In this case, the bonds were issued on June 1 and the reporting period is December 31, which means that the bonds were outstanding for seven months (June 1 to December 31). Therefore, the bond interest expense for the year ended December 31, 2009, is for a period of seven months.

Bonds Are Issued on June 1 That Have Interest Payment