When interest expense is calculated using the effective-interest amortization method,interest expense (assuming that interest is paid annually)always equals the

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When using the effective-interest amortization method, the interest expense is calculated by multiplying the book value of the bonds by the effective interest rate. This method takes into account the actual interest earned on the bond investment and the amortization of any discount or premium on the bond. The actual amount of interest paid may differ from the interest expense calculated using this method. The stated interest rate is only used to determine the cash interest payments to be made on the bonds. The maturity value of the bonds is not relevant to the calculation of interest expense.

When Interest Expense Is Calculated Using the Effective-Interest Amortization Method,interest