The effective-interest method is required for companies reporting under IFRS, but optional for companies using ASPE if other methods do not result in material differences.

Question

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Under IFRS, the effective-interest method is required for the amortization of bond premiums and discounts, while ASPE (Accounting Standards for Private Enterprises in Canada) allows for a straight-line method or another systematic and rational method if the results do not differ materially from the effective-interest method.

The Effective-Interest Method Is Required for Companies Reporting Under IFRS