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1. Under what conditions of a bond issuance does a discount arise? 2. How are discounts reported on the face of the financial statements? 3.

1. Under what conditions of a bond issuance does a discount arise?

2. How are discounts reported on the face of the financial statements?

3. Describe the two methods of amortizing a discount.

4. Why does GAAP find the effective-interest method of discount amortization preferable?

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