25. ABC Company is in the process of issuing bonds. The bonds have a stated interest rate of 6%, which is 2% above the current market rate. What effect will the two interest rates have on the bond issue price?

A. The issue price will be above the bond's face value.

B. The issue price will be below the bond's face value.

C. The issue price will equal the bond's face value.

D. Cannot determine without knowing the face value.

26. LalaGurl, Incorporated soldleggings made from a fabric that gave many of its customers a serious rash. The customers are suing the company in a class acon suit. Although the verdict is not yet

in,LalaGurls aorneys think it is probable that the case will cost the company $2 million. The company should:

A. not include this informaon in its annual report.

B. record a liability and a gain for $2 million.

C. only explain the situaon in the notes to the financial statements.

D. record a liability and a loss for $2 million.