On January 1, 20X7, Clyde County issued $100 million of 5%, 20-year bonds at 102. Interest is

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On January 1, 20X7, Clyde County issued $100 million of 5%, 20-year bonds at 102. Interest is payable semiannually. The proceeds were restricted for the construction of a new county water purification plant for its Water Enterprise Fund.

What effect will the bond premium amortization have on interest expense in 20X7, assuming straight-line amortization is used where appropriate?

a. No effect.

b. Increase interest expense by $100,000.

c. Decrease interest expense by $100,000.

d. None of the above.

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Governmental And Nonprofit Accounting Theory And Practice

ISBN: 9780132552721

9th Edition

Authors: Robert J Freeman, Craig D Shoulders, Gregory S Allison, Terry K Patton, Robert Smith,

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Question Posted: Feb 24, 2024 05:01 AM

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On January 1, 20X7, Clyde County issued $100 million of 5%, 20-year bonds at 102. Interest is payable semiannually. The proceeds were restricted for the construction of a new county water...
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On January 1, 20X7, Clyde County issued $100 million of 5%, 20-year bonds at 102. Interest is

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The correct answer is c Decrease interest expense by 100000 Explan...View the full answer

Governmental And Nonprofit Accounting Theory And Practice

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