On January 1, 2020, Leno Ltd. issues bonds for $770,000. The bonds have a maturity value of $800,000 and mature on December 31, 2022. The coupon rate on the bonds is 3 percent, with the interest paid annually on December of each year. The maturity amount is paid on December 31, 2022. What are the tax consequences related to this bond issue for Leno Ltd. in each of the years 2020 through 2022? How would these tax consequences differ from the information included in Leno's GAAP based financial statements? Leno Ltd. uses the straight-line method to amortize the discount on the bonds for accounting purposes.

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The Answer of On January 1, 2020, Leno Ltd. issues bonds for $770,000. The bonds have a maturity value of $800,000 and mature on December 31, 2022. The coupon rate on the bonds is 3 percent, with the interest paid annually on December of each year. The maturity amount is paid on December 31, 2022. What are the tax consequences related to this bond issue for Leno Ltd. in each of the years 2020 through 2022? How would these tax consequences differ from the information included in Leno's GAAP based financial statements? Leno Ltd. uses the straight-line method to amortize the discount on the bonds for accounting purposes.