When bonds are sold at a discount and the effective interest method is used, at each interest payment date, the interest expense:
A) Increases.
B) Decreases.
C) Remains the same.
D) Is equal to the change in book value.

Question

Quizplus · Accepted Answer

When bonds are sold at a discount, the effective interest method is used to allocate and recognize interest expense over the life of the bond. The interest expense gradually increases each period as the discount is amortized to interest expense.

When Bonds Are Sold at a Discount and the Effective