CFA Practice Question

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CFA Practice Question

Kiawah Corp. sold bonds at a price of 96.2 plus accrued interest. At the time of this issuance, the carrying value of the bonds would be less than:

Face Value of the Bonds : Cash Received by Kiawah (ignore fees)
A. Yes : Yes
B. Yes : No
C. No : Yes
Explanation: Since the carrying value (face value less discount) at issuance is equal to the purchase price, the carrying amount would be less than both the face value (price of 100) and the cash received, since the latter includes accrued interest.

User Contributed Comments 2

User Comment
murli Carrying value of bond sold below Par < Par
Carrying value < Cash received as cash includes interest accrued.
thekobe accrued interest is the key
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