Which of the following is not true of bonds issued at a premium?
A)The cash proceeds exceed the face amount of the bonds.
B)The amortization of bond premium decreases the interest expense.
C)The amount of the Premium on Bonds Payable account is subtracted from the face amount of the bonds to determine the net liability reported in the balance sheet.
D)The market rate was below the coupon rate.
E)Amortization of the premium decreases the carrying value of the bond.

Question

Quizplus · Accepted Answer

The amount of the Premium on Bonds Payable account is added to the face amount of the bonds to determine the total liability reported in the balance sheet, not subtracted as stated in option C. Therefore, option C is not true for bonds issued at a premium.

Which of the Following Is Not True of Bonds Issued