Problem
On 1/1/2009 ABC, Inc. purchases a 5-year $2,000,000 bond 10% requiring quarterly interest payments of $50,000 from XYZ, Inc. They classify this investment as 'Held to Maturity'. If ABC, Inc. is willing to accept 8% for this bond, and XYZ, Inc. agrees to the price needed to create an effective yield of 8%, what would be the journal entry for ABC, Inc. on 1/1/2009 to record the purchase?
How to calculate premium and when selling the bonds early how to calculate the PVOA %? explain details please.