Discount on bonds is an additional cost of borrowing and should be recorded as interest expense over the life of the bonds.

Question

Quizplus · Accepted Answer

This statement is true. Discount on bonds refers to the difference between the face value of the bonds and the price they are sold for, which is usually less than the face value. This difference represents an additional cost of borrowing and should be recorded as interest expense over the life of the bonds. This is because the discounted amount effectively increases the interest expense paid by the borrower over the life of the bond, and it is important to account for this additional cost over time.

Discount on Bonds Is an Additional Cost of Borrowing and Should