With the effective interest method of amortization, the amortization of bond discount results in a(n)
A) increase in interest expense.
B) decrease of stockholders' equity.
C) increase in stockholders' equity.
D) decrease in interest expense.

Question

Quizplus · Accepted Answer

The effective interest method of amortization increases interest expense over the life of the bond because it applies a constant interest rate to the carrying amount of the bond, which increases as the discount is amortized.

With the Effective Interest Method of Amortization, the Amortization of Bond