CPAnet Forum: Carrying Value of Bond payable

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grapefruit2016
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Newbie

Joined: 02 May 2016
Location: United States
Online Status: Offline
Posts: 1

Posted: 02 May 2016 at 19:16 \| IP Logged

Hello, I am puzzled by the carrying value of bonds
with issuance costs in chapter 5 of becker
In my Becker book 2016 texts, bond issuance costs
should be treated as reduction of the net carrying
value of bond payable under both GAAP and IFRS.
However, the practice questions seemed to contradict
with this. In question 39 of F5 topic 3(IFRS), it said
IFRS treated bond issuance cost as reducing caring
value of bonds payable, and in question 27 of the
optional questions(GAAP), it explains "bond issuance
costs" are a deferred charge and are not netted or
included in the carrying value of the bonds under US
GAAP. Why would the explanations differ from the text
example?

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nambivar
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Joined: 14 Nov 2010
Location: United States
Online Status: Offline
Posts: 144

Posted: 14 May 2016 at 21:35 \| IP Logged

"bond issuance costs should be treated as reduction of the net carrying value of bond payable under both GAAP and IFRS."

This is correct insofaras presentation of debt issuance costs;
The relevant FASB standard does not affect the recognition
and measurement of debt issuance costs. This means,
the amortization of debt issuance costs should continue to be calculated using the interest method and be reported as interest expense.

"However, the practice questions ..........value of bonds payable," -This is correct.

" ....and in question 27 of the..Why would the explanations differ from the text example?"-
I do not have the text you are referring to. {I passed the CPA exam in 2011} ; As you may be aware, they issue updates as pdf [google or visit their website];
if you do not find your doubt covered in such updates, you may like to
visit their webpage, use the 'contact us' form or customer support [toll free numbers] wherein you can convey your doubt and request their reply.

Hope this helps.

nambivar
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Joined: 14 Nov 2010
Location: United States
Online Status: Offline
Posts: 144

Posted: 14 May 2016 at 21:37 \| IP Logged

my above reply is in response to grapefruit2016 's query; sorry forgot to mention at the beginning.

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