Rana purchases a 5%, $100,000 corporate bond at issuance on January 1, 2018 for $91,500. The bond matures in five years. In 2018 Rana will recognize interest income of
A) $0.
B) $5,000.
C) an amount less than $5,000 (but more than $0).
D) an amount greater than $5,000.
D) an amount greater than $5,000.
The discount is large enough to be classified as original issue discount. The OID is amortized based on constant interest rate method, resulting in additional interest income added to the $5,000 interest received.
You might also like to view...
Which of the following leadership behaviors identified by the culturally endorsed implicit leadership theory is defined as--independent and individualistic leadership?
A. charismatic/value-based B. participative C. self-protective D. autonomous
Pre-interview planning on the part of an interviewee involves:?
A) ?sending a sincere, original thank-you message after a position has been accepted. B) ?following a predetermined agenda designed to elicit necessary information from the interviewer. C) ?making sure your appearance and mannerisms will not detract from the impression you hope to make. D) ?presenting his or her qualifications in a clear and persuasive manner.
A party who owes a duty of performance under a contract is called the ________.
A. obligor B. assignor C. assignee D. obligee
Which of the following is NOT an indication of a successful contracting meeting?
a. consultant and client have come to an agreement on the process for moving forward b. consultant and client have appropriately negotiated needs and roles c. consultant and client have inconsistencies in expectations d. consultant and client are each satisfied with the relationship