Which of the following statements, applying US GAAP wherever appropriate, is false?

Group of answer choices

Fox Co. issues bonds at discount to Owl Co., so Fox is debt financing whereas Owl is equity investing.

Interest expense reduces both book and taxable income, whereas dividends declared reduce neither.

Bond interest payable is a current liability whereas bond payable is generally a long-term liability.

Bond interest expense is generally based on effective rate whereas cash interest is based on stated rate.

Which of the following changes made by Fox Co. in 2020 would require changing amounts on the 2019 and 2018 columns of Foxs comparative income statement for 2020:

1) Change in inventory method to FIFO from LIFO 2) Change from straight-line to declining balance method

Group of answer choices

Both 1) & 2)

Neither 1) nor 2)

1) only

2) only

Fox Co. issued 6%, 4-year, $500,000 bonds at 96 on July 1, 2021, with semi-annual interest to be paid each January 1 and July 1. What effect does the entry on bond issuance have on Foxs assets & liabilities?

Group of answer choices

Assets increase by 500,000 & Liabilities increase by 480,000

Assets increase by 480,000 & Liabilities increase by 480,000

Assets increase by 480,000 & Liabilities increase by 500,000

Assets increase by 500,000 & Liabilities increase by 500,000

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