The carrying value,using the effective interest method,would decrease each year:
A)If the bonds were sold at a discount.
B)If the bonds were sold at a premium.
C)If the bonds were sold at either a discount or a premium.

Question

Quizplus · Accepted Answer

When bonds are sold at a premium, the carrying value decreases each year as the premium is amortized down to the bond's face value over its life. This is because the premium represents an amount paid over the bond's face value, which needs to be amortized over the bond's term.

The Carrying Value,using the Effective Interest Method,would Decrease Each Year