When graphing the amount of interest paid over time and the amount of interest expensed over time,the lines are parallel if the effective interest amortization method is used.

Question

Quizplus · Accepted Answer

Under the effective interest amortization method, the amount of interest expense increases over time as the carrying amount of the bond increases due to the amortization of the discount or decreases due to the amortization of the premium, leading to a non-linear relationship rather than parallel lines.

When Graphing the Amount of Interest Paid Over Time and the Amount