If Bonds Are Originally Sold at a Discount Using the Straight-Line

question 190

Multiple Choice

If bonds are originally sold at a discount using the straight-line amortization method

• A) interest expense in the earlier years of the bond's life will be less that the interest to be paid.
• B) interest expense in the earlier years of the bond's life will be the same as interest to be paid.
• C) unamortized discount is subtracted from the face value of the bond to determine its carrying value.
• D) unamortized discount is added to the face value of the bond to determine its carrying value.

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Definitions:

Depreciation Rate

The depreciation rate is the percentage rate at which an asset is depreciated across its useful life, determining how much of its value is expensed each year.