The interest expense recorded on an interest payment date is increased
A) only if the market rate of interest is less than the stated rate of interest on that date
B) by the amortization of premium on bonds payable
C) by the amortization of discount on bonds payable
D) only if the bonds were sold at face value

Question

Quizplus · Accepted Answer

The interest expense recorded on an interest payment date is increased by the amortization of discount on bonds payable. When bonds are sold at a discount, the stated interest rate is less than the market rate of interest, causing the bond's price to be lower than face value. The discount is then amortized over the life of the bonds, which increases the interest expense recorded on each interest payment date.

The Interest Expense Recorded on an Interest Payment Date Is