As a premium on notes payable is amortized:
A)the carrying value of the note and interest expense are increased.
B)both the carrying value of the note is and interest expense are unchanged
C)the carrying value of the note decreases and interest expense decreases
D)the carrying value of the note increases and the interest expense decreases

Question

Quizplus · Accepted Answer

When a premium on notes payable is amortized, the carrying value of the note decreases over time because the premium is being used up. This also results in a decrease in interest expense, as the interest is calculated on a lower carrying amount.

As a Premium on Notes Payable Is Amortized