If a company records a discount or premium with the Bonds Payable in a single account called Bonds Payable,Net,it must use the effective interest method of amortization.

Question

Quizplus · Accepted Answer

The effective interest method of amortization takes into account the discount or premium on the bonds and allocates it to interest expense over the life of the bonds. Therefore, if a company records a discount or premium with the Bonds Payable in a single account called Bonds Payable, Net, it must use the effective interest method of amortization.

If a Company Records a Discount or Premium with the Bonds