Premium on bonds payable may be amortized by the straight-line method if the results obtained by its use do materially differ from the results obtained by use of the interest method.

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According to GAAP, premium on bonds payable should generally be amortized by the interest method. However, if the straight-line method results in material differences in the amount of interest expense recognized compared to the interest method, then the straight-line method may be used. This exception is allowed to simplify accounting when the results are not materially different.

Premium on Bonds Payable May Be Amortized by the Straight-Line