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On January 3, 2017, Adams Company acquires $500,000 of Apple Companys 10-year, 10% bonds at...

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Accounting

On January 3, 2017, Adams Company acquires $500,000 of Apple Companys 10-year, 10% bonds at a price of $532,090 to yield 9%. Interest is payable each December 31. The bonds are classified as held-to-maturity.

a) Assuming that Adams Company uses the effective-interest method, what is the amount of interest revenue that would be recognized in 2018 related to these bonds?

b) Assuming that Adams Company uses the straight-line method, what is the amount of premium amortization that would be recognized in 2019 related to these bonds?

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