The cash paid for interest will always be greater than interest expense when using effective-interest amortization for a bond.

Question

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With effective-interest amortization, the amount of interest expense recognized each period varies based on the current carrying value of the bond and the effective interest rate. Therefore, the cash paid for interest may be greater or less than the interest expense recognized in a particular period. The two amounts will only be equal if the effective interest rate equals the stated interest rate of the bond.

The Cash Paid for Interest Will Always Be Greater Than