In June 2010, Gross Corporation Issued a Three-Year Non-Interest-Bearing Note

Multiple Choice

In June 2010, Gross Corporation issued a three-year non-interest-bearing note with a face value of $15, 000 and received cash of $11, 025.00 in exchange.The difference between the face value and the cash proceeds is accounted for as

A) a premium and amortized over three years by the effective interest method
B) interest expense in the current year
C) a discount and amortized over three years by the effective interest method
D) a discount and amortized over three years by the straight-line method