If bonds are initially sold at a discount and the straight-line method of amortization is used, interest expense in the earlier years will be
A)higher than it would have been had the effective interest method of amortization been
Used.
B)less than it would have been had the effective interest method of amortization been
Used.
C)the same as it would have been had the effective interest method of amortization been
Used.
D)less than the stated rate of interest.

Question

Quizplus · Accepted Answer

Under the straight-line method, the same amount of discount is amortized each period, leading to higher interest expense in the earlier years compared to the effective interest method, which allocates more interest expense in the later years as the carrying amount of the bond increases.

If Bonds Are Initially Sold at a Discount and the Straight-Line