Which of the following statements regarding the effective-interest method of accounting for bonds characteristics is false?
A) GAAP always requires use of the effective interest method.
B) The amount of periodic interest expense decreases over the life of a discounted bond issue when the effective-interest method is used.
C) Over the life of the bonds, the carrying value increases for discounted bonds when using the effective-interest method.
D) The effective-interest method applies a constant percentage to the bond carrying value to compute interest expense.
Correct Answer:
Verified
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Q128: When the effective-interest method of bond premium
Q129: $2 million, 8%, 10-year bonds are issued
Q130: Presented here is a partial amortization schedule
Q132: Silcon Company issued $500,000 of 6%, 10-year
Q133: On January 1, Patterson Inc. issued $5,000,000,
Q134: On January 1, Polk Corporation issued $2,000,000,
Q135: Silcon Company issued $500,000 of 6%, 10-year
Q136: Presented here is a partial amortization schedule
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