On January 1, 20X7, Clyde County issued $100 million of 5%, 20-year bonds at 102. Interest is
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On January 1, 20X7, Clyde County issued $100 million of 5%, 20-year bonds at 102. Interest is payable semiannually. The proceeds were restricted for the construction of a new county water purification plant for its Water Enterprise Fund.
What effect will the bond premium amortization have on interest expense in 20X7, assuming straight-line amortization is used where appropriate?
a. No effect.
b. Increase interest expense by $100,000.
c. Decrease interest expense by $100,000.
d. None of the above.
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The correct answer is c Decrease interest expense by 100000 Explan...View the full answer
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ISBN: 9780132552721
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Authors: Robert J Freeman, Craig D Shoulders, Gregory S Allison, Terry K Patton, Robert Smith,
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