When the Straight-Line Method of Amortization Is Used for a Bond

question 14

Multiple Choice

When the straight-line method of amortization is used for a bond discount,the amount of interest expense for an interest period is calculated by

• A) adding the amount of discount amortization for the period to the amount of cash paid for interest during the period.
• B) deducting the amount of discount amortization for the period from the amount of cash paid for interest during the period.
• C) multiplying the carrying value of the bonds by the effective interest rate.
• D) multiplying the face value of the bonds by the face interest rate.

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