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What amount of interest expense will ffc recognize on nov

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Reference no: EM132652478

Ferris Farriers Corp. (FFC) issued $10,000,000, 4.0%, eight-year bonds on June 1, 20X2, when the market rate of interest for similar bonds was 3.0%. Interest is first payable on November 30, 20X2, and semi-annually thereafter on each May 31 and November 30. FFC paid its lawyers $25,000 for drafting the bond indenture (contract). FFC classifies the bonds at fair value through profit or loss (FVPL). FFC, a publicly-traded company, only makes adjusting entries at its December 31 year end.

Problem 1: What amount of interest expense will FFC recognize on November 30, 20X2?

a) $150,000
b) $160,598
c) $162,039
d) $200,000

Reference no: EM132652478

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