Rana purchases a 5%,$100,000 corporate bond at issuance on January 1,2017 for $91,500.The bond matures in five years.In 2017 Rana will recognize interest income of

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Quizplus · Accepted Answer

D)The discount is large enough to be classified as original issue discount.The OID is amortized based on constant interest rate method,resulting in additional interest income added to the $5,000 interest received.

Rana Purchases a 5%,$100,000 Corporate Bond at Issuance on January