Under the effective-interest method of amortizing bond discount, the interest expense recorded for each semiannual interest payment:
A)increases over the life of the bond.
B)decreases over the life of the bond.
C)remains constant over the life of the bond.
D)exceeds the interest expense recognized by the straight-line method.

Question

Quizplus · Accepted Answer

Under the effective-interest method of amortizing bond discount, the interest expense recorded for each semiannual interest payment increases over the life of the bond as the balance of the bond payable decreases. This produces a gradually increasing interest expense instead of a constant expense recognized under the straight-line method.

Under the Effective-Interest Method of Amortizing Bond Discount, the Interest