Amortizing a bond discount will ________ the discount balance and ________ the carrying value of the bond so that when the bond matures the carrying value will ________ the face value.

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The bond sold at a discount because the stated rate is lower than the market rate of interest.The discount represents an extra cost of borrowing,over and above each interest payment.For accounting purposes,we match the extra borrowing cost to the periods in which interest is recorded.This amortization causes the Interest Expense to be more than the interest payment and,at the same time,causes Discount on Bonds Payable to decrease each period.As the Discount on Bonds Payable decreases,the carrying value of the liability increases until it reaches the face value of the bonds on the maturity date.Or,in other words,amortizing a bond discount will decrease the discount balance and increase the carrying value of the bond so that when the bond matures the carrying value will equal the face value.

Amortizing a Bond Discount Will ________ the Discount Balance and ________

Amortizing a Bond Discount Will the Discount Balance and