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

Name: Interest expense increases over time when a bond is initially issued at a premium and the effective-interest method is used.
Brand: Quizplus
Rating: 4.9 (33 reviews)

Question

Quizplus · Accepted Answer

When a bond is issued at a premium, the interest expense decreases over time under the effective-interest method because the carrying amount of the bond decreases as the premium is amortized.

Interest Expense Increases Over Time When a Bond Is Initially