Straight-line amortization problem

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Karen owns City of Richmond bonds with a face value of $10,000. She purchased the bonds on January 1, 2010, for $11,000. The maturity date is December 31, 2019. The annual interest rate is 8%. What is the amount of taxable interest income that Karen should report for 2010, and the adjusted basis for the bonds at the end of 2010, assuming straight-line amortization is appropriate?

a. $0 and $11,000.

b. $0 and $10,900.

c. $100 and $11,000.

d. $100 and $10,900.

e. None of the above.

Reference no: EM13125235

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