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

question 8

Multiple Choice

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

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

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Definitions:

Organic Product

A compound or substance that is the result of an organic chemical reaction.