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    The effective interest method of discount amortization

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    On January 1, 2014, HVAC, Inc. issued $50,000 of ten-year 6% bonds for $43,800. Interest was payable semiannually. The effective yield was 8%. The effective interest method of discount amortization was used.
    What amount of interest expense should be recorded for the six-month period ending December 31, 2014? And how did you get this answer?
    1. $1,762
    2. $2,000
    3. $1,752
    4. $1,500

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    https://brainmass.com/business/bond-valuation/effective-interest-method-discount-amortization-571070

    Solution Preview

    One June 30, 2014:
    For the first six moths, the interest expense is based on the market interest rate of 8% and the carrying amount of the ...

    Solution Summary

    Explains how to calculate the interest expense under the effective interest method of discount amortization.

    $2.19