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Desert Corporation issued $1,000,000, 7%, 10-year bonds on January 1, 20x1 when the market rate was 5%. Interest will be paid semi-annually each July
Desert Corporation issued $1,000,000, 7%, 10-year bonds on January 1, 20x1 when the market rate was 5%. Interest will be paid semi-annually each July 1 and January 1. Determine which of the following statements is not true: The cash paid for interest on July 1 will be less than Interest Expense for the period. The bonds will be issued at a premium Interest expense will accrue based on the CV times 2.5% The carrying value of this bond will decrease as it nears maturity.
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