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Knowledge Check 01 Which of the following statements about investments in bonds are true? (Select all that apply.) Part 1 of 3 Check All That

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Knowledge Check 01 Which of the following statements about investments in bonds are true? (Select all that apply.) Part 1 of 3 Check All That Apply nts Skipped If the stated rate is higher than the market rate, investors will purchase the bond at a discount eBook Print If the stated rate is higher than the market rate, investors will purchase the bond at a premium References The investor values that stream of future cash flows based on the stated rate of the bond The purchase price of a bond security is determined by computing the present value of the related stream of cash flows. Which of the following statements about the accounting for debt investments are true? (Select all thet apply.) Check All That Apply When debt investments are purchased, they are recorded at cost If a company purchases bonds for an amount that's less than their face amount, it credits Discount orn bond investment for the difference. When the effective interest method is used, the effective interest (or interest revenue) for each period equeals the stated rate of interest multiplied by the outstanding ballance of the debt at the beginning of the period The amortization of the discount gradually decreases the amortized cost of an investment in bonds purchased at a discount Knowledge Check 01 Which of the following statements about the adjustments made in the equity method are true? (Select all that apply.) Check All That Apply When the investor's expenditure to acquire an equity-method investment is less than the book value of the underlying net assets acquired, additional adjustments to both the investment account and investment revenue might be needed "Amortizing the differential" refers to adjustment to both the investment account and investment revenue for differences between net incomereported by the investee and what that amount would have been if consolidation procedures had been followed The adjustments required are limited to depreciable and amortizable assets No adjustments are required for land or goodwill

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