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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
On 1 January 2010, Elegant Fragrances Company issues £1,000,000 face value, five year bonds with annual interest payments of £55,000 to be paid each 31 December. The market interest rate is 6.0 percent. Using the effective interest rate method of amortisation, Elegant Fragrances is most likely to record:
A. an interest expense of £55,000 on its 2010 income statement.
B. a liability of £982,674 on the 31 December 2010 balance sheet.
C. a £58,736 cash outflow from operating activity on the 2010 statement of cash flows.
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