If a company sells a bond at a discount, why does that reduce their liabilities?
If Company A sells a $100,000 bond at a discounted price of $96,000, shouldn't their liability still be $100,000?
Textbook says their liability would be $96,000 ($100,000 with a contra account of $4000, netting $96000 liabilities).
But the discount... that didn't go to the issuer (Company A), it goes to the buyer. So why does Company A not owe $100,000?