The Interest Rate at Which an Acquired Company Issued Its

Multiple Choice

The interest rate at which an acquired company issued its long-term bonds payable is higher than the current market rate. The bonds have a four-year remaining life at the date of acquisition. Which statement is true concerning the write-off of revaluation of these bonds in the fourth year after acquisition (eliminating entry O) ?

A) Interest expense will increase
B) Bonds payable will increase
C) Interest expense will decrease
D) No eliminating entry (O) is needed