Under the effective interest method of amortizing a bond discount,the bond interest expense recorded for each period increases over the life of the bond.

Question

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Under the effective interest method, the bond interest expense recorded for each period increases over the life of the bond because the interest is calculated based on the effective interest rate, which is higher than the stated coupon rate in case of a bond sold at a discount. As a result, the bond discount is amortized over the life of the bond, leading to an increase in the bond interest expense recorded each period.

Under the Effective Interest Method of Amortizing a Bond Discount,the