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Austral Electronics Company Before Kim went to business school, she had a friend who...

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Accounting

Austral Electronics Company
Before Kim went to business school, she had a friend who worked for Austral Electronics Company ("Austral"). As Kim recalled, during her friend's time with the company, it had issued a US $1 million equivalent local currency eight-year zero-coupon bond priced to yield 10% at maturity. ?5
Kim had three questions for her study group: (1) How should Austral have accounted for its zerocoupon bond at the issue date? (2) How should the company have accounted for the zero-coupon bond at the end of the first year following it issuance? (3) At the end of the third year?
Please answer the study group questions and the following three question
1. How do you account for the zero coupon bond of austral electronics on issue date? 2. What would the journal entries be at the end of year 1 and year 2?
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