Essay About Issuance Of Bonds And Useful Life Of An Asset

Accounting Case
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In week two, we learned about preparing the necessary journal entries when
Recording the issuance of bonds, periodic interest, and amortization of bond
Premiums and discounts. An accountant needs to know this information and
Also finds it very important, because if the journal entries are not recorded
Properly it could cause many problems for the corporation. The face value of the
Bonds and the interest should be calculated correctly. The amortization of the
Bond premiums and discounts is the same way. If not recorded correctly the
Calculations could result in being too high or too low for the bonds value.
We also learned that there are many methods to go by when calculating the
Depreciation and amortization expense. The most common method used by
Corporations are the straight line method. Upon review of this method we were
Able to see how the calculations are determined. First you need to determine the
Original price of the asset. Next you determine the useful life of an asset. Lastly
You divide the assets cost by the useful life to obtain the depreciation or
Amortization expense.
One of the other methods corporations use is the declining balance method of
Depreciation. This method is a common calculation system that applies the
Depreciation rate up against the non depreciated depreciation balance, this method
Expenses the assets at a rate that is constant, so the ending calculations show the
Depreciation that is declining for that period. The last method we want to discuss is
The units of activity method uses the expected change with the value over the
Life and also the amount of use within that cost. With each year, the corporation
Receives the same cost per unit with the usage then its multiplied by the number of
Units that are used in that period.