When bonds are issued at a discount and the effective interest method is used for amortization,at each interest payment date,the interest expense:

Question

Quizplus · Accepted Answer

When bonds are issued at a discount, the effective interest method is used for amortization. Under this method, the interest expense increases each period because the discount (the difference between the bond's face value and the amount received) is gradually being amortized over the life of the bond. As a result, the interest expense recorded each period will be higher than the actual cash paid for interest.

When Bonds Are Issued at a Discount and the Effective