The straight-line method of amortization is theoretically superior to the effective interest method as it allocates the discount equally over the life of the bond.

Question

Quizplus · Accepted Answer

The effective interest method is theoretically superior because it reflects the time value of money by allocating interest expense based on the carrying amount of the bond, resulting in a more accurate representation of interest expense over time.

The Straight-Line Method of Amortization Is Theoretically Superior to the Effective