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L&M entity raise funds by issuing zero coupon bonds at par on the first day of the current accounting period with a nominal value of

L&M entity raise funds by issuing zero coupon bonds at par on the first day of the current accounting period with a nominal value of $10,000. The bonds will be redeemed after two years at a premium of 1,449$. The effective rate of interest is 7%
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Explain and illustrate how the loan is accounted for in the financial statement of L& M Entity

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