On 1 January 2013, Diab Services Issued $140 000 of 4-

question 36

Multiple Choice

On 1 January 2013, Diab Services issued $140 000 of 4- year debentures with a stated rate of 9%. The market rate at time of issue was 8%, so the debentures were issued with a premium and sold for $144 758. Diab uses the effective- interest method to amortise debenture premium. Half- yearly interest payments are made on 30 June and 31 December of each year. How much interest expense will be recorded when the first interest payment is made?

• A)$6 300
• B)$1 050
• C)$5 790
• D)$11 200

---

Definitions:

Hair Cell

A specialized auditory receptor cell within the inner ear that enables hearing by converting sound vibrations into electrical signals.

Volley Principle

A theory explaining how auditory nerve fibers respond to sounds of different frequencies by firing together in volleys to convey the pitch of sound.

Frequency Theory

A theory in the field of psychophysics that suggests the perception of pitch is related to the rate at which auditory nerve fibers fire.

Basilar Membrane

An important structure in the cochlea of the inner ear, it plays a critical role in the sensory process of hearing by transforming sound vibrations into neural signals.