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What amount should be reported as interest expense

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Reference no: EM132691934

Question - On May 31, 2020, VIOLET Company issued 6% bonds with face amount of 4,000,000 for net proceeds of 3,677,600, a price that yields 8%. Interest is payable annually every December 31. The entity elected the fair value option. On December 31, 2020, the bonds are quoted at 97.

Required -

A. What amount should be reported as interest expense for the year ended December 31, 2020?

B. What is the carrying amount of the bonds payable on December 31, 2020?

C. On April 30, 2021, the entity retired the bonds at 102. What is the gain or loss on retirement?

Reference no: EM132691934

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