When the Effective-Interest Method of Amortization Is Used, What Happens

question 14

Multiple Choice

When the effective-interest method of amortization is used, what happens to the amount of discount or premium amortized as a bond moves toward maturity?

• A) The amount of discount or premium amortized each period decreases.
• B) The amount of discount or premium amortized each period increases for bonds sold at a discount but decreases for bonds sold at a premium.
• C) The amount of discount or premium amortized each period increases.
• D) The amount of discount or premium amortized each period decreases for bonds sold a discount but increases

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