In June 2010, Gross Corporation issued a - 14640

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In June 2010, Gross Corporation issued a three-year non-interest-bearing note with a face value of $15,000 and received cash of $11,025.00 in exchange. The difference between the face value and the cash proceeds is accounted for as

Answer

 

a premium and amortized over three years by the effective interest method

 

interest expense in the current year      

 

a discount and amortized over three years by the effective interest method

 

a discount and amortized over three years by the straight-line method

 

Solution Description

 

In June 2010, Gross Corporation issued a three-year non-interest-bearing note with a face value of $15,000 and received cash of $11,025.00 in exchange. The difference between the face value and the cash proceeds is accounted for as

Answer