How Does a Company Account for the Difference Between Interest

question 27

Multiple Choice

How does a company account for the difference between interest expense and the cash payment of interest when bonds are issued at less than their face value?

• A) The difference is accounted for using Amortization of Bond Premium.
• B) The difference is accounted for using Amortization of Bond Discount.
• C) In this situation the cash payment of interest will exceed interest expense.
• D) The difference is accounted for using Bonds Payable.

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