When the amount received for the bond is less than the face value,the difference is written off over time in an account called Discount on Bonds Payable.

Question

Quizplus · Accepted Answer

This is correct. When a bond is issued at a price below face value, the difference between the price received and the face value is recorded as a discount on bonds payable. The discount is then amortized over the life of the bond, which means it is gradually written off and recognized as interest expense.

When the Amount Received for the Bond Is Less Than