The interest method for amortization of bonds allocates equal amounts of premium to Bonds Interest Expense each period.

Question

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The interest method (also known as the effective interest rate method) of amortization of bonds allocates interest expense in a way that results in a constant rate of interest over the life of the bond, which means the amount allocated to interest expense varies each period, not equal amounts.

The Interest Method for Amortization of Bonds Allocates Equal Amounts