There are three steps required to calculate amortization using the effective interest method. Which one of the following is NOT a required step?
A) Calculate interest expense on the carrying amount of the bonds.
B) Calculate interest expense on the fair value of the bonds.
C) Calculate bond interest paid.
D) Calculate the amortization amount.

Question

Quizplus · Accepted Answer

The effective interest method of amortization involves calculating interest expense based on the carrying amount of the bond, not its fair value. Therefore, calculating interest expense on the fair value of the bonds is not a required step in this method.

There Are Three Steps Required to Calculate Amortization Using the Effective