A Bond Is Issued for More Than Its Face Value

question 72

Multiple Choice

A bond is issued for more than its face value.Which of the following statements most likely would explain why?

• A)The bond's contract rate is lower than the market rate at the time of the issue.
• B)The bond's contract rate is the same as the market rate at the time of the issue.
• C)The bond's contract rate is higher than the market rate at the time of the issue.
• D)The bond is secured by specific assets of the corporation.

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Definitions:

Net Realizable Value

The estimated selling price of goods minus the estimated costs of completion and the costs necessary to make the sale.

FIFO Periodic

An inventory valuation method where the oldest inventory items are recorded as sold first, under a periodic system that updates inventory balances at the end of an accounting period.

Beginning Inventory

The value of a company's inventory at the start of an accounting period, carried over from the end of the prior period.

Sold Units

The number of units of a product or goods that have been sold during a specific period.