A government has $1,000,000 of 6%, 10-year general obligation bonds outstanding. The bonds were issued on August 15, 20X6 to finance construction of a general capital asset. Interest is payable semiannually on February 15 and August 15. What is the maximum amount of interest expenditures that the government would be permitted to report on the bonds for the year ended December 31, 20X6?

Question

Quizplus · Accepted Answer

The bonds were issued on August 15, 20X6, so no interest would have been accrued for the year ended December 31, 20X6. Therefore, the maximum amount of interest expenditures that the government would be permitted to report on the bonds for the year ended December 31, 20X6 would be $0.

A Government Has $1,000,000 of 6%, 10-Year General Obligation Bonds