When interest expense is calculated using the effective-interest amortization method,interest expense on a bond that pays interest annually is equal to the:
A)actual amount of interest paid.
B)carrying value of the bonds payable multiplied by the effective interest rate.
C)maturity value of the bonds payable multiplied by the effective interest rate.
D)carrying value of the bonds payable multiplied by the stated interest rate.

Question

Quizplus · Accepted Answer

The effective-interest method of amortization applies a constant percentage,the effective interest rate,to the carrying value of bonds payable to calculate interest expense each year.

When Interest Expense Is Calculated Using the Effective-Interest Amortization Method,interest