If a company records a discount or premium with the Bonds Payable in a single account called Bonds Payable,Net,it must use the effective interest method of amortization.
BT: Comprehension

Question

Quizplus · Accepted Answer

This statement is true. The effective interest method of amortization takes into account the discount or premium on bonds payable and amortizes it over the life of the bond using the effective interest rate. If the company records the discount or premium in a single account called Bonds Payable,Net, it indicates that they are using the effective interest method of amortization.

If a Company Records a Discount or Premium with the Bonds