The carrying amount of Coastalview Magazine's callable bonds at July 31, 2027, is $606,000. This comprises the initial carrying amount of $564,000, annual interest payments of $90,000, and premium amortization of $42,000 due to the bonds being called at 101% of face value.
The carrying amount of a bond is the book value on the balance sheet, considering the initial issuance price, subsequent interest payments, and any premium or discount amortization. Coastalview Magazine issued $600,000 of 15-year, 5% callable bonds at 94 on July 31, 2024.
The initial carrying amount at issuance is $564,000.
Over the next three years (from 2024 to 2027), Coastalview made annual interest payments totaling $90,000.
On July 31, 2027, Coastalview called the bonds at 101, paying back bondholders $606,000.
The premium amortization is $42,000 (Call Price - Initial Carrying Amount).
The carrying amount at July 31, 2027, is the sum of the initial carrying amount and the premium amortization, resulting in $606,000.