Interest expense decreases over time when a bond is initially issued at a premium and the effective-interest method is used.

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When a bond is issued at a premium, it means the bond was sold at a price higher than its face value or par value. Over time, the premium amount is amortized or spread over the life of the bond using the effective-interest method. As a result, the interest expense recognized on the income statement decreases over time, as the premium is gradually reduced.

Interest Expense Decreases Over Time When a Bond Is Initially