15. On 1 January 2010, Elegant Fragrances Company issues 1,000,000 face value, five-year bonds with annual interest payments of E55,000 to be paid each 31 December. The market interest rate ib. percent. Using the effective interest rate method of amortization. Elegant Fragrances is most like record: A) an interest expense of S5,000 on its 2010 income statement B) a liability of 982,674 on the 31 December 2010 balance sheet C) a 58,73 6 cash outflow from operating activity on the 2010 statement of cash flows Using the effective interest rate method, the reported interest expense of a bond issued at a premium will A) decrease over the term of the bond. B) increase over the term of the bond. C) remain unchanged over the term of the bond. be 17. A firm has revenues of $8,000 for each of three years. The firm estimates the warranty expense to 12.5% of revenues each year. An actual expenditure of $2,500 to meet warranty claims was not made until the third year. Warranty expenses cannot be recognized for tax purposes until they are a paid. The tax rate is 30%, which of the following is most accurate? ctually A) At the end of year 2 the company would show a deferred tax asset of $300 B) At the end of year 2 the company would show a deferred tax liability of $300 At the end of year 2 the company would show a deferred tax asset of $600 D) At the end of year 2 the company would show a deferred tax liability of $600 financial reporting purposes but they are not recognized for tax purposes. The firm is most likely t record: A) a deferred tax asset B) a deferred tax liability C) no deferred tax asset or liability 18. A firm incurred fines and expenses because of violation of a law. These expenses are recognized fo rtav nurnoces and straight-line depreciation fo