Question

A discount on bonds should be reported in the balance sheet:________.

A) At the present value of the future addition to bond interest expense due to the discount.
B) As a reduction in bond issue costs.
C) As a reduction of the face amount of the bond.
D) As a deferred credit

Answer 1

Answer: As a reduction of the face amount of the bond.

Step-by-step explanation:

Bond discount is the amount through which the market price of bonds are lower than its principal amount when it is due at maturity.

The primary characteristics of a bond are its face value, coupon rate and market price. When there is a discount on bonds, while reporting it in the balance sheet, it should be as a decrease of the face amount value of the bond.