Miller Corp

Multiple Choice

Miller Corp. purchased $1,000,000 of bonds at 96. The bonds pay interest at the rate of 10%. Miller intends to hold these bonds to maturity. Which of the following statements is correct?

A) Since the bonds were purchased at a premium, the cash interest will be less than interest revenue.
B) Since the bonds were purchased at a discount, the book value of the bond investment will increase.
C) The bond investment must be accounted for using the trading securities classification.
D) The company would recognize unrealized gains or losses on the bonds.