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The Carrying Value of a Bond Issued at a Premium

Question 90

Multiple Choice

The carrying value of a bond issued at a premium:


A) decreases by equal amounts each year if straight-line amortization is used.
B) decreases by equal amounts each year if effective interest amortization is used.
C) decreases by larger and larger amounts each year if effective interest amortization is used.
D) decreases by equal amounts each year if straight-line amortization is used and decreases by increasing amounts each year if effective interest amortization is used.

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