On 1 July 2008, Roos Limited Issues $3 Million in Ten

Multiple Choice

On 1 July 2008, Roos Limited issues $3 million in ten year, 8 per cent annual debentures to Hall Limited. The market required rate of return on the debentures at the time is 12 per cent. On 1 July 2010, Hall Limited decided to forgive the debt owed by Roos Limited, and so cancels the debt. Assuming Roos Limited uses the straight-line method to amortise the debenture discount, what is the journal entry passed in the books of Roos Limited at 1 July 2010?:

A)
B)
C)
D)
E) None of the given answers.