Using the effective-interest amortization method,the calculation for the amount of premium amortization is the difference between the cash paid for interest and the calculated interest expense based on the effective interest rate.

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This statement is true. Under the effective-interest amortization method, the premium (or discount) amortization is calculated as the difference between the cash paid for interest and the calculated interest expense based on the effective interest rate. This method is used to allocate the cost (or proceeds) of a bond over its term in a way that reflects the time-value of money and the actual cash flows.

Using the Effective-Interest Amortization Method,the Calculation for the Amount of Premium