When the effective-interest method of bond premium amortization is used, the

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When using the effective-interest method, the amount of premium amortized will get larger with successive amortization as the carrying value of the bonds decreases. This is because the effective interest rate is calculated based on the current carrying value of the bonds, which means that the interest expense is higher in the earlier periods and decreases over time. The carrying value of the bonds will also decrease with successive amortization, not increase. The interest paid to bondholders will remain the same, as it is based on the contractual rate.

When the Effective-Interest Method of Bond Premium Amortization Is Used