When there are material differences between the results of using the straight-line method and using the effective interest method of amortization, the effective interest method should be used.

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Quizplus · Accepted Answer

The effective interest method of amortization is considered more accurate because it takes into account the time value of money and adjusts the interest expense accordingly. Therefore, if there are material differences between the two methods, the effective interest method should be chosen to provide a more accurate representation of the amortization of the debt instrument.

When There Are Material Differences Between the Results of Using