meet_ex5


Exhibit 5: Amortization of Bond Discount Using the Interest Method
$400,000 of 9%, five-year bonds (semi-annual interest payments) sold to yield 10% at January 1, 2001.

Selling price is calculated as follows:

Present value of $400,000 in 5 years $400,000 0.61391 $245,564.00  
Present value of interest payments $18,000 7.72173 $138,991.14
$384,555.14
 
Date Cash
payment
Interest expense Discount amortization Carrying value of bonds
January 1, ’01 — — — $384,555.14
July 1, ’01 $18,000.00 $19,227.76 $1,227.76 $385,782.90
January 1, ’02 $18,000.00 $19,289.14 $1,289.14 $387,072.04
July 1, ’02 $18,000.00 $19,353.60 $1,353.60 $388,425.64
January 1, ’03 $18,000.00 $19,421.28 $1,421.28 $389,846.93
July 1, ’03 $18,000.00 $19,492.35 $1,492.35 $391,339.27
January 1, ’04 $18,000.00 $19,566.96 $1,566.96 $392,906.24
July 1, ’04 $18,000.00 $19,645.31 $1,645.31 $394,551.55
January 1, ’05 $18,000.00 $19,727.58 $1,727.58 $396,279.13
July 1, ’05 $18,000.00 $19,813.96 $1,813.96 $398,093.08
January 1, ’06 $18,000.00 $19,906.92* $1,906.92 $400,000.00
*$2.27 rounding error

FEATURE

Maximizing the higher education tax credits

A counterintuitive strategy can save taxes by including otherwise excludable scholarships in gross income.

SPONSORED REPORT

Solving the lease accounting challenge

The challenges of the new lease accounting standard have been pervasive to say the least. In this free, independently-written report, you'll learn effective adoption strategies as well as resources for easing the transition to the new standard.