The balance in Premium on Bonds Payable
A) should be reported on the balance sheet as a deduction from the related bonds payable
B) should be allocated to the remaining periods for the life of the bonds by the straight-line method, if the results obtained by that method materially differ from the results that would be obtained by the interest method
C) would be added to the related bonds payable on the balance sheet
D) should be reported in the paid-in capital section of the balance sheet

Question

Quizplus · Accepted Answer

Premium on Bonds Payable is added to the related bonds payable on the balance sheet, as it represents an amount received over the face value of the bonds, effectively reducing the cost of borrowing.

The Balance in Premium on Bonds Payable