Which of the following statements is true?
A) The carrying amount of the bonds will increase each year if the bonds were issued at a discount.
B) The carrying amount of the bonds will increase each year if the bonds were issued at a premium.
C) Total interest expense will increase each year if the bonds are issued at a discount and the straight-line method of amortization is used.
D) Total interest expense will increase each year if the bonds are issued at a premium and the effective interest method of amortization is used.

Question

Quizplus · Accepted Answer

When bonds are issued at a discount, the carrying amount increases each year as the discount is amortized to interest expense, bringing the carrying amount closer to the face value of the bonds over time.

Which of the Following Statements Is True