The Premium on Bonds Payable account is shown on the balance sheet as

Question

Quizplus · Accepted Answer

When bonds are issued at a premium, it means they are sold for more than their face value. The premium on bonds payable is recorded in a separate account and is shown on the balance sheet as an addition to the bonds payable account. Over the life of the bonds, this premium is amortized to interest expense, which effectively reduces the interest expense reported on the income statement. The premium serves to adjust the effective interest rate on the bonds to the market rate at the time of issuance.

The Premium on Bonds Payable Account Is Shown on the Balance