Miller Corp. purchased $1,000,000 of bonds at 96. The bonds pay interest at the rate of 10%. Miller intends to hold these bonds to maturity. Which of the following statements is correct?
A) Since the bonds were purchased at a premium, the cash interest will be less than interest revenue.
B) The bond investment must be accounted for using the trading securities classification.
C) Since the bonds were purchased at a discount, the book value of the bond investment will increase.
D) The company would recognize unrealized gains or losses on the bonds.
Correct Answer:
Verified
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