The bond discount should be reduced by $50,000 for the six months ended December 31, 2024. This is because the effective interest method requires the discount on bonds to be amortized over the life of the bonds.
The bond discount is the difference between the face value ($10 million) and the issue price ($9 million). Thus, the bond discount is $1 million. The interest rate of 10% is applied to the bond discount of $1 million and divided by two to get the amount to be amortized each six months. Therefore, the bond discount should be reduced by $50,000 ($1 million * 10% / 2) for the six months ended December 31, 2024.
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