On January 1, 2020 Tako, Inc. purchased 10 year bonds with a…
On January 1, 2020 Tako, Inc. purchased 10 year bonds with a face value $1,000,000 and a stated rate of 3%, paying $1,089,828. Interest is payable January 1st. The premium provides an effective yield of 2%. Tako, Inc. uses the effective-interest method and plans to hold these bonds to maturity. For the year ended December 31, 2020, should Tako, Inc. increase or decrease the Bond Investment account and by how much?
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