Use the following information taken from a financial website to answer the following question(s):

-Refer to the information above.Will the carrying value of IBM's bonds increase or decrease with each interest payment?
A)increase
B)decrease
C)remain the same
D)The answer cannot be determined from the information given.

Question

Use the following information taken from a financial website to answer the following question(s):

-Refer to the information above.Will the carrying value of IBM's bonds increase or decrease with each interest payment?
A)increase 
B)decrease 
C)remain the same 
D)The answer cannot be determined from the information given.

Quizplus · Accepted Answer

The carrying value of bonds decreases with each interest payment if the bonds were issued at a premium, as the premium is amortized over the life of the bond. Conversely, for bonds issued at a discount, the carrying value increases as the discount is amortized until it reaches the face value at maturity. However, without specific information about whether the bonds were issued at a premium, discount, or par, the general principle is that the carrying value adjusts towards the face value over time through interest payments.

Use the Following Information Taken from a Financial Website to Answer