Chang Corp

question 53

Multiple Choice

Chang Corp. purchased $1,000,000 of bonds at par value on April 1, 2010. The bonds pay interest at the rate of 10%. Chang intends to hold these bonds to maturity. Which of the following statements is false?

• A) Since they were classified as held-to-maturity, the company would recognize no unrealized gains or losses on the bonds over their lifetime.
• B) The bond investment must be accounted for using the fair value approach.
• C) The bonds will earn $75,000 of interest by December 31, 2010.
• D) Since the bonds were issued at par value, the cash interest will be the same as interest revenue.

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