The effective interest rate method
A)Allocates bond interest expense using a changing interest rate
B)Allocates interest expense using the contract rate
C)Allocates a decreasing amount of interest expense over the life of a bond originally sold at a discount
D)Allocates bond interest expense using a constant interest rate
E)Allocates interest expense based on a constant carrying value

Question

Quizplus · Accepted Answer

The effective interest rate method allocates bond interest expense using a constant interest rate, which is the market rate at the time of issuance.

The Effective Interest Rate Method