With the effective interest method of amortization, the amortization of bond premium results in a(n)
A) increase in stockholders' equity.
B) no change in stockholders' equity.
C) increase in interest expense.
D) decrease in interest expense.

Question

Quizplus · Accepted Answer

The effective interest method of amortization of bond premium decreases interest expense over the life of the bond, as the premium paid over par value is allocated against interest payments, effectively reducing the amount of interest expense recognized in each period.

With the Effective Interest Method of Amortization, the Amortization of Bond