Using the effective-interest method of amortization, interest expense is based on the carrying amounts of the bond times the effective-interest rate for the interest period.

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This statement is true. The effective-interest method of amortization takes into account the changing carrying amount of the bond as well as the effective-interest rate, which results in varying amounts of interest expense being recognized over the life of the bond.

Using the Effective-Interest Method of Amortization, Interest Expense Is Based