A government issues 10-year bonds with a face value of $100,000 at a 2% premium. If issuance costs amount to $3,000, what expenditure is recorded for this bond issuance?

When a government issues bonds, the expenditure recorded for that bond issuance includes the costs that are directly associated with the issuance. In this scenario, the issuance costs amount to $3,000.

The important factor here is understanding that the premium (the additional amount above the face value) and the costs associated with the issuance are distinct. While the bonds themselves will be recorded at their face value plus any premium taken into account for financial reporting purposes, the actual cash outflow that represents the expenditure related to issuing the bonds is solely the issuance costs, which in this case is $3,000.

Therefore, the expenditure recorded reflects the costs incurred to bring the bond issue to market, which is precisely the $3,000 in issuance costs. This expenditure informs users of the financial statements about the direct costs related to borrowing and reflects the real price the government pays to issue the bonds.