Premium on bonds payable may be amortized by the straight-line method if the results obtained by its use do not materially differ from the results obtained by use of the interest method.

Question

Quizplus · Accepted Answer

This statement is true according to generally accepted accounting principles. However, companies may choose to use the interest method if they believe it more accurately reflects the pattern of interest expense over the life of the bonds.

Premium on Bonds Payable May Be Amortized by the Straight-Line