If bonds have been issued at a premium, then over the life of the bonds the
A) carrying amount of the bonds will decrease.
B) interest expense will remain unchanged.
C) carrying amount of the bonds will increase.
D) unamortized discount will increase.

Question

Quizplus · Accepted Answer

When bonds are issued at a premium, the carrying amount (the book value of the bonds) decreases over time as the premium is amortized. This is because the premium paid above the face value of the bonds is amortized into interest expense over the life of the bonds, reducing the carrying amount to the bond's face value at maturity.

If Bonds Have Been Issued at a Premium, Then Over