Assuming that Auerbach issued the bonds for $255,369,000, what interest expense would it recognize in its 2013 income statement?
A)$0.
B)$3,830,535.
C)$5,107,380.
D)$7,661,070.

Question

Quizplus · Accepted Answer

The correct answer is B because the interest expense is calculated as the face value of the bonds multiplied by the stated interest rate. In this case, the face value of the bonds is $255,369,000 and the stated interest rate is 1.5%, so the interest expense is $255,369,000 x 1.5% = $3,830,535.

Assuming That Auerbach Issued the Bonds for $255,369,000, What Interest