What would be the reported amount of interest expense


Problem: On December 31, Y2, Highbury Co. has a bond issue outstanding that has a face value of $1,000,000, an unamortized premium of $50,000, a coupon rate of 8%, and five years remaining to maturity. Non-affiliated investors hold all the bonds. Market rates of interest have risen above the coupon rate on the bonds, and have caused the market price of Highbury Co.'s bonds to fall. On December 31, Y2, Dundas Co. purchases all of the outstanding bonds of Highbury Co. for $900,000. If during Y2 Highbury recorded bond premium amortization of $10,000, what would be the reported amount of interest expense related to the bonds on the consolidated income statement for Y2? Question options: $80,000 $0 $90,000 $70,000

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Accounting Basics: What would be the reported amount of interest expense
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