A Company Issued Bonds When the Stated Rate of Interest

question 94

Multiple Choice

A company issued bonds when the stated rate of interest was 10% and the market rate was 8%.Which of the following statements is incorrect?

• A)The bonds were issued at a premium.
• B)Annual interest expense will be less than the company's annual cash payments for interest.
• C)The book value of the bonds will decrease as the bond matures.
• D)The annual interest expense will increase if the effective-interest method of amortization was used.

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