Chang Corp

question 34

Multiple Choice

Chang Corp. purchased $1,000,000 of bonds at par value on April 1, 20X0. 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 the bonds were issued at par value, the cash interest will be the same as interest revenue.
• B) The bonds will earn $75,000 of interest by December 31, 20X0.
• C) The bond investment must be accounted for using the fair value approach.
• D) Since they were classified as held-to-maturity, the company would recognize no unrealized gains or losses on the bonds over their lifetime.

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Definitions:

Price

The charge established, required, or paid in exchange for an object.

Demand Curve

Graphically illustrates the quantity of a product or service consumers are willing to buy at various price points, underlining the inverse relationship between price and demand.

Price

The expenditure required to procure a good, service, or asset.

Income

The amount of money received by an individual or entity over a specified period, usually through employment, business, or investments.