Complete the project will be obtained from local businesses

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Question: Sandhill Inc. is building a new hockey arena at a cost of $2,300,000. It received a down payment of $460,000 from local businesses to support the project, and now needs to borrow $1,840,000 to complete the project. It therefore decides to issue $1,840,000 of 10-year, 10.5% bonds. These bonds were issued on January 1, 2023, and pay interest annually on each January 1. The bonds yield 10.5% to the investor and have an effective interest rate to the issuer of 10.40530%. (There is an increased effective interest rate due to the capitalization of the bond issue costs.) Any additional funds that are needed to complete the project will be obtained from local businesses. Sandhill paid and capitalized $46,000 in bond issuance costs related to the bond issue. Sandhill prepares financial statements in accordance with IFRS

Reference no: EM133655025

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