Which of the Following Are Allowable Methods of Dealing with a Discount

question 10

Multiple Choice

Which of the following are allowable methods of dealing with a discount on issue of debentures?
1) Amortise the discount by straight line over the life of the debenture as an annual period expense to profit and loss
2) Amortise the discount by reducing balance over the life of the debenture as an annual period expense to profit and loss
3) Recognise the whole discount immediately as a period expense
4) Amortise the discount by adjusting (increasing) interest expense over the life of the debenture

• A)1, 2 and 3
• B)1, 2 and 4
• C)1, 2, 3 and 4
• D)4 only

---

Definitions:

Regression Coefficient

A value that represents the degree of change of a dependent variable expected from a one-unit change in an independent variable, all else being equal.

Simple Linear Regression

A statistical technique that fits a linear equation to observed data to model the connection between a dependent variable and a single independent variable.

t-test Statistic

A test statistic used to determine if there is a significant difference between the means of two groups.

F-test Statistic

A value derived from an F-test which is used to compare statistical models in terms of variance explained by the models, to determine if the models are significantly different from each other.