A corporation that issues bonds at a discount will recognize interest expense at a rate which is greater than the market rate of interest.

Question

Quizplus · Accepted Answer

When a corporation issues bonds at a discount, the interest expense recognized is based on the effective interest rate method, which results in an interest expense that is greater than the coupon rate, but equal to the market rate of interest at the time of issuance.

A Corporation That Issues Bonds at a Discount Will Recognize