51. The carrying amount of the bonds is defined as the face value of the bonds plus any unamortized discount or less any unamortized premium.
52. If bonds of $1,000,000 with unamortized discount of $10,000 are redeemed at 98, the gain on redemption of bonds is $10,000.
53. Gains and losses on the redemption of bonds are reported as other income or other expense on the income statement.
54. Bonds may be purchased directly from the issuing corporation or through one of the bond exchanges.
55. Bonds payable would be listed at their carrying value on the balance sheet.
56. The unamortized Discount on Bonds Payable account is a contra-liability account.
57. The balance in Premium on Bonds Payable should be reported as a deduction from Bonds Payable on the balance sheet.
58. The balance in a bond discount account should be reported on the balance sheet as a deduction from the related bonds payable.
59. The higher the times interest earned ratio, the better the creditors’ protection.
60. The times interest earned ratio is calculated by dividing Bonds Payable by Interest Expense.