C is corrent. When bonds are issued, the issuing company often incurs printing costs, legal fees, commissions, and other similar expenses. Per ASC 835-30-45-3, bond issue costs are debited to a deferred charge account and amortized similarly to the bond discount. The amortization expense related to the bond issue costs is the same regardless of how the bond issue costs are reported on the balance sheet (i.e., as a deferred charge or as a reduction of the liability).
A is incorrect. When bonds are issued, the issuing company often incurs printing costs, legal fees, commissions, and other similar expenses. Per ASC 835-30-45-3, bond issue costs are debited to a deferred charge account and amortized similarly to the bond discount. The amortization expense related to the bond issue costs is the same regardless of how the bond issue costs are reported on the balance sheet (i.e., as a deferred charge or as a reduction of the liability).
B is incorrect because the amortization of the bond issue costs will reduce net income over the 10-year life of the bonds.
D is incorrect. When bonds are issued, the issuing company often incurs printing costs, legal fees, commissions, and other similar expenses. Per ASC 835-30-45-3, bond issue costs are debited to a deferred charge account and amortized similarly to the bond discount. The amortization expense related to the bond issue costs is the same regardless of how the bond issue costs are reported on the balance sheet (i.e., as a deferred charge or as a reduction of the liability).
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