Question
On January 1, 2020, Loony Company purchased 10% bonds with face value of 5,000,000 plus transaction cost of 101,500 with a yield rate of 8%.
On January 1, 2020, Loony Company purchased 10% bonds with face value of 5,000,000 plus
transaction cost of 101,500 with a yield rate of 8%. The bonds mature on December 31, 2025 and pay
interest annually on December 31. The carrying amount of the investment on December 31, 2020 using
the effective interest method is 5,333,620. What is the initial acquisition cost of the bond investment?
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Managerial Accounting
Authors: Wendy M. Tietz, Louis Beaubien, Karen W. Braun
3rd Canadian edition
134460826, 134460820, 9780134524818 , 978-0134526270
