Premium on Bonds Payable is a balance sheet item for Generic Products Company.How would it most likely be classified on the balance sheet?
A)An increase to a long-term liability
B)Revenue
C)Long-term asset
D)Contra liability

Question

Quizplus · Accepted Answer

Premium on Bonds Payable is an increase to a long-term liability because it represents the amount paid by investors for the bonds above their face value. It is a liability because the company has an obligation to repay the bonds at maturity, and the premium is amortized over the life of the bonds as a reduction in interest expense.

Premium on Bonds Payable Is a Balance Sheet Item for Generic