A corporation that issues bonds at a discount will recognize interest expense at a rate which is greater than the market interest rate.

Name: A corporation that issues bonds at a discount will recognize interest expense at a rate which is greater than the market interest rate.
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Question

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When a corporation issues bonds at a discount, the interest expense recognized is based on the effective interest rate, which is equal to the market interest rate at the time of issuance, not greater.

A Corporation That Issues Bonds at a Discount Will Recognize