The amortization of a premium on bonds payable:
A)increases the carrying value of the bonds
B)increases the amount of interest expense recorded for the bonds
C)decreases the amount of interest expense recorded for the bonds
D)has no effect on the amount of interest expense recorded for the bonds

Question

Quizplus · Accepted Answer

Amortization of a premium on bonds payable decreases the amount of interest expense recorded for the bonds. This is because the premium (the amount by which the bond's selling price exceeds its face value) is amortized over the life of the bond, effectively reducing the bond's carrying value and thus the interest expense recognized in each period.

The Amortization of a Premium on Bonds Payable