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.

---

Definitions:

Independence

The condition of a nation, country, or state which exercises self-government, and sovereignty, free from external control.

Louisiana Purchase

The acquisition by the United States of America of France’s claim to the territory of Louisiana in 1803, which doubled the size of the U.S.

Rocky Mountains

A major mountain range in western North America, stretching from Canada through the United States, known for its stunning landscapes and diverse ecosystems.

Gulf of Mexico

A large ocean basin located between the southern coast of the United States, Mexico, and the island of Cuba, known for its significant biodiversity and oil resources.