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On January 1, 2021, a company acquires $540,000 of another companys 7% bonds at a price of $420,000. For the investor company, interest is received
On January 1, 2021, a company acquires $540,000 of another companys 7% bonds at a price of $420,000. For the investor company, interest is received on January 1 of each year, and the bonds mature on January 1, 2031. The investment will provide the investor a 10% yield (assumed for ease of computation; do not attempt computation beyond the years necessary). The bonds are classified as held-to-maturity. Using the effective interest method, what is the amount the investor company will record for Interest Revenue for the year ended 12/31/2022?
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