When a bond is issued at a premium,the interest expense calculation using the effective-interest amortization method uses the carrying amount of the bonds and the market rate of interest.

Question

Quizplus · Accepted Answer

When a bond is issued at a premium, the effective-interest amortization method is used to calculate interest expense. This method uses the carrying amount of the bonds (which includes any unamortized premium) and the market rate of interest to determine the interest expense for each period. Therefore, the statement is true.

When a Bond Is Issued at a Premium,the Interest Expense