During the past year a company reported bond interest expense of $29,875 and a cash interest payment of $27,500;therefore the bond's carrying value must have increased by $2,375 during the past year.

Question

Quizplus · Accepted Answer

The difference between the bond interest expense and the cash interest payment ($29,875 - $27,500 = $2,375) represents the amortization of the bond discount, which increases the carrying value of the bond.

During the Past Year a Company Reported Bond Interest Expense