With the effective interest method of amortization,the amortization of bond discount results in a(n)
A)increase in interest expense.
B)decrease in stockholders' equity.
C)increase in stockholders' equity.
D)decrease in interest expense.

Question

Quizplus · Accepted Answer

The effective interest method of amortization refers to the periodic reduction of the bond discount or premium over the life of the bond using the effective interest rate. As the bond discount is reduced, the interest expense is increased, and this increase is reflected on the income statement. Therefore, the correct answer is A) an increase in interest expense.

With the Effective Interest Method of Amortization,the Amortization of Bond