Lenz Corporation issued ten-year, 8 percent bonds payable in 2009 at a premium. During 2010, the company's accountant failed to amortize any of the bond premium. The omission of the premium amortization will

Question

Quizplus · Accepted Answer

Failure to amortize the bond premium will lead to an understatement of interest expense for 2010, which will result in an overstatement of net income for 2010. However, this error will not affect the net income reported for 2009, as it was not identified or corrected until 2010.

Lenz Corporation Issued Ten-Year, 8 Percent Bonds Payable in 2009