Under the effective-interest method, if bonds are issued at a discount:
A)the amount of interest expense decreases each interest period as the bonds move towards maturity.
B)the amount of interest expense remains the same for each interest period.
C)the amount of interest expense increases each period as the bonds move towards maturity.
D)none of the above occur.

Question

Quizplus · Accepted Answer

Under the effective-interest method, when bonds are issued at a discount, the interest expense increases each period as the bond's carrying amount increases towards its face value at maturity.

Under the Effective-Interest Method, If Bonds Are Issued at a Discount