197. Either the straight-line method or the effective-interest method of amortization will always result in A) the same amount of interest expense being recognized over the term of the bonds. B) the same amount of interest expense being recognized each year. C) more interest expense being recognized than if premium or discounts were not amortized. D) the same carrying value each year during the term of the bonds.

Question

Quizplus · Accepted Answer

The straight-line method and effective-interest method both result in the same total amount of interest expense being recognized over the term of the bonds, even though the amount recognized each year may differ. Therefore, choice A is the correct answer. Choice B is incorrect because the amount of interest recognized each year may differ depending on the method used. Choice C is incorrect because amortizing a premium or discount may result in less interest expense being recognized over the term of the bonds. Choice D is incorrect because the carrying value of the bonds will decrease over time as premium or discount is amortized using either method.