Where a bond is sold at a discount,interest expense recorded using the effective interest method is less than the interest paid on that bond.

Question

Quizplus · Accepted Answer

When a bond is sold at a discount, interest expense recorded using the effective interest method is actually greater than the interest paid on that bond. This is because the effective interest method recognizes the bond discount as part of the interest expense over the life of the bond.

Where a Bond Is Sold at a Discount,interest Expense Recorded