The amount of amortized bond premium
A)reduces interest expense on the income statement.
B)is reported as a deduction from bonds payable on the balance sheet.
C)is reported as an addition to bonds payable on the balance sheet.
D)is added to the present value of bonds.

Question

Quizplus · Accepted Answer

The amount of amortized bond premium reduces interest expense on the income statement. This is because the premium is the difference between the purchase price of the bond and its face value, which results in a lower effective interest rate. The premium is amortized over the life of the bond, which means it is gradually reduced and added to interest expense on the income statement.

The Amount of Amortized Bond Premium