A COMPANY HAD THE FOLLOWING EVENTS RELATED TO $5 MILLION OF 10-YEA...

32. - MOCK AND SAMPLE EXAMS CFA 2012 L1 SAMPLE EXAM V1 QUESTION
MOCK AND SAMPLE EXAMS CFA 2012 L1 SAMPLE EXAM V1 QUESTION
32. A company had the following events related to $5 million of 10-year bonds with a coupon rate of 8% payable semi-annually on 30 June and 31 December:  Issued on 1 January 2005, when the market rate of interest was 6%.  Bought back in an open market transaction on 1 January 2011, when the market rate of interest was 8%. Which of the following statements best describes the effect of the bond repurchase on the financial statements for 2011? If the company uses the indirect method of calculating the cash from operations, there will be a: A. $346,511 gain on the income statement. B. $743,873 gain on the income statement. C. $350,984 decrease in the cash from operations.