Either the straight-line method or the effective-interest method of amortization will always result in
A) the same amount of interest expense being recognized over the term of the bonds.
B) the same amount of interest expense being recognized each year.
C) more interest expense being recognized than if premium or discounts were not amortized.
D) the same carrying value each year during the term of the bonds.

Question

Quizplus · Accepted Answer

Both the straight-line method and effective-interest method aim to allocate the premium or discount over the term of the bonds. Therefore, both methods will result in the same total amount of interest expense being recognized over the term of the bonds.

Either the Straight-Line Method or the Effective-Interest Method of Amortization