Original-issue discount on corporate bonds issued during the current year must be amortized over the life of the bond using the straight-line method.

Question

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Original issue discount on corporate bonds can be amortized using either the straight-line method or the effective interest rate method, with the latter being the preferred method under U.S. Generally Accepted Accounting Principles (GAAP).

Original-Issue Discount on Corporate Bonds Issued During the Current Year