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Business, 23.12.2020 02:20 agm0102

On January 1, 20X6, Pepper Corporation issued 10-year bonds at par to unrelated parties. The bonds have a 10% stated rate, face value of $300,000, and pay interest every June 30 and December 31. On December 31, 20X9, Salt Corporation purchased all of Pepper's bonds in the open market at a $6,000 discount. Salt is Pepper's 80 percent owned subsidiary. Salt uses the effective interest method of amortization. The consolidated income statement for the year 20X9 should report with respect to the bonds: I. interest expense of $30,000. II. a gain of $6,000.

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On January 1, 20X6, Pepper Corporation issued 10-year bonds at par to unrelated parties. The bonds h...
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