Question
On January 1, 2014, Luna Company issued bonds with a face value of $2,100,000 at 95. The bonds will mature in 5 years. Interest at
On January 1, 2014, Luna Company issued bonds with a face value of $2,100,000 at 95. The bonds will mature in 5 years. Interest at 9% was payable in cash on December 31 of each year. The discount will be amortized using the straight line method. Based on this information, the amount of interest expense shown on the 2014 income statement and the cash flow from operating activities shown on the 2014 statement of cash flows would be:
| Interest Expense | Cash Outflow | |||
| A) | $ | 179,550 | $ | 189,000 |
| B) | $ | 189,000 | $ | 189,000 |
| C) | $ | 210,000 | $ | 189,000 |
| D) | $ | 210,000 | $ | 210,000 |
Choice B
Choice D
Choice A
Choice C
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Intermediate Accounting IFRS
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
3rd edition
1119372933, 978-1119372936
