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X Corp issues a bond on April 1, 2021, with a maturity date of March...

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Accounting

X Corp issues a bond on April 1, 2021, with a maturity date of March 31, 2031. The redemption amount is 100,000, and the bonds were issued to the public. The first price paid for the bond was $55,000, but most of the bonds issued sold for $50,000. The annual yield to maturity on the bond is 7%. The bonds do not have a coupon. Assume that B bought the bond on the date it was issued for $50,000.

How much interest income will B include in its income for 2021 if B is a cash basis taxpayer? If B is an accrual basis taxpayer?

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