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How much interest income must Katrina report

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Reference no: EM132670402

Problem - On July 1, 2019, Katrina purchased tax-exempt bonds (face value of $75,000) for $82,000. The bonds mature in five years, and the annual interest rate is 3%.

Required -

a. How much interest income and/or interest expense must Katrina report in 2019, assuming that straight-line amortization is appropriate?

b. What is Katrina's adjusted basis for the bonds on January 1, 2020?

Reference no: EM132670402

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