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Question
On January 1, 2012 when the effective interest rate was 12%, Philips Co. issued bonds with a maturity value of $200,000. The stated rate of interest is 12% and the bonds pay interest semi-annually. Philips Co. paid $2,000 in bond issue costs on this date. If Philips Co. uses IFRS, the effective interest rate will be
A. slightly lower than 12%.
B. slightly higher than 12%.
C. 12%.
D. Cannot be determined based on the information provided.
Answer
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