For bonds issued at a premium,the difference between interest expense and the cash paid increases the carrying value of the bonds.For bonds issued at a premium,the difference between interest expense and the cash paid decreases the carrying value of the bonds.

Question

Quizplus · Accepted Answer

The statement is incorrect. For bonds issued at a premium, the difference between interest expense and the cash paid decreases the carrying value of the bonds, as the premium is amortized over the life of the bond, reducing the bond's carrying value.

For Bonds Issued at a Premium,the Difference Between Interest Expense