Bonds affected by error, On January 2, 2010, Laura Co. issued 8% bonds with a face amount, Accounting Basics

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Bonds affected by error

On January 2, 2010, Laura Co. issued 8% bonds with a face amount of $1,000,000 maturing on January 2, 2020. The bonds were issued to yield 12%, resulting in a discount. Laura incorrectly used the straight-line method instead of the effective interest method to amortize the discount. How is the carrying amount of the bonds affected by this error as of December 31, 2011?

a. understated

b. overstated

c. cannot be determined with information provided

d. no effect

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Accounting Basics: Bonds affected by error

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Accounting Basics: Bonds affected by error

Reference No:- TGS046037

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Recent Questions Asked Accounting Basics

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Accounting Basics: Bonds affected by error

Reference No:- TGS046037

Recent Questions Asked Accounting Basics

Q : Problem on market value of the stock

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