Amortizing a bond discount:
A)Allocates a part of the total discount to each interest period.
B)Increases the market value of the Bonds Payable.
C)Decreases the Bonds Payable account.
D)Decreases interest expense each period.
E)Increases cash flows from the bond.

Question

Quizplus · Accepted Answer

Amortizing a bond discount involves allocating a portion of the total discount to each interest period. This reduces the amount of interest expense recognized each period, as well as decreases the balance of the Bonds Payable account. However, it does not increase the market value of the bonds or cash flows from the bond.

Amortizing a Bond Discount