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 20X6?

Question

Quizplus · Accepted Answer

The bonds were issued on August 15, 20X6, so no interest payment would have been made by December 31, 20X6, which is the end of the government's fiscal year. Therefore, the government would not report any interest expenditure on the bonds for 20X6.

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