With the effective interest method of amortization, the amortization of a bond premium results in a(n)
A) increase in liabilities.
B) decrease of stockholders' equity.
C) increase in interest expense.
D) decrease in interest expense.

Question

Quizplus · Accepted Answer

The effective interest method results in a decrease in interest expense over time as the bond premium is amortized, reducing the carrying amount of the bond liability.

With the Effective Interest Method of Amortization, the Amortization of a Bond