Which of the following is TRUE of the Premium on Bonds Payable account? (The bonds are due in ten years.)
A) It is added to the Bonds Payable balance and shown with long-term liabilities on the balance sheet.
B) It is added to the Bonds Payable balance and shown with stockholders' equity on the balance sheet.
C) It is subtracted from the Bonds Payable balance and shown with long-term liabilities on the balance sheet.
D) It is subtracted from the Bonds Payable balance and shown with the current liabilities on the balance sheet.

Question

Quizplus · Accepted Answer

The Premium on Bonds Payable account is added to the Bonds Payable balance because it represents the excess amount paid by investors over the face value of the bond. This combined amount is shown as a long-term liability on the balance sheet.

Which of the Following Is TRUE of the Premium on Bonds