Question
1. On January 3, 2017, Pecan Company acquires $100,000 of Pie Company's 10-year, 10% bonds at a price of $103,220 to yield 9.5%. Interest is
1. On January 3, 2017, Pecan Company acquires $100,000 of Pie Company's 10-year, 10% bonds at a price of $103,220 to yield 9.5%. Interest is payable each June 30 and December 31. The bonds are classified as held to maturity.
a) Assuming that Pecan Company uses the effective interest method, what is the amount of interest revenue that would be recognized in 2018 related to these bonds?
b) Assuming that Pecan Company uses the straight line method, what is the amount of premium amortization that would be recognized in 2019 related to these bonds?
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Forensic Accounting
Authors: Greg Shields
1st Edition
1727480988, 978-1727480986
