If an issuer sells bonds at a premium:
A) The carrying value of the bond stays constant over time.
B) The carrying value increases from the par value to the issue price over the bond's term.
C) The carrying value decreases from the par value to the issue price over the bond's term.
D) The carrying value decreases from the issue price to the par value over the bond's term.
E) The carrying value increases from the issue price to the par value over the bond's term.

Question

Quizplus · Accepted Answer

When bonds are sold at a premium, the carrying value decreases from the issue price to the par value over the bond's term as the premium is amortized.

If an Issuer Sells Bonds at a Premium