Investments in bonds are accounted for using
A)historical cost.
B)capital leases.
C)the effective interest method.
D)net realizable value.

Question

Quizplus · Accepted Answer

Bonds are typically accounted for using the effective interest method, which takes into consideration both the stated interest rate on the bond and any premiums or discounts. This method calculates the actual interest income earned and the amortization of premiums or discounts over the life of the bond. Options A, B, and D are not relevant to the accounting of bonds.

Investments in Bonds Are Accounted for Using