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Suppose Chester invested in plant and equipment last year. The plant investment was funded with bonds at a face value of $14,000,000 at 11.0% interest
Suppose Chester invested in plant and equipment last year. The plant investment was funded with bonds at a face value of $14,000,000 at 11.0% interest and equity of $6,200,000. Depreciation is 15 years straight line, with no scrap value For this transaction alone, which of the following statements are true? 1) Depreciation increased by $1,346,667 . 2) Buying the plant had no net effect on the Cash account. 3) Cash went up by $14,000,000 when the bond was issued. 4) Cash went down by the amount of the plant purchase.
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