For the issuer of a 10-year term bond, the amount of amortization using the interest method would increase each year if the bond was sold at a
Discount Premium

Question

For the issuer of a 10-year term bond, the amount of amortization using the interest method would increase each year if the bond was sold at a Discount Premium

Quizplus · Accepted Answer

When a bond is sold at a discount, the amount of amortization increases each year under the interest method because the carrying amount of the bond increases towards its face value over time. However, for a bond sold at a premium, the amortization amount decreases each year as the carrying amount decreases towards the bond's face value.

For the Issuer of a 10-Year Term Bond, the Amount