Using Straight-Line Amortization,when a Bond Is Sold at a Premium

question 75

Multiple Choice

Using straight-line amortization,when a bond is sold at a premium:

• A)the amortized premium is added to the interest payable to calculate interest expense.
• B)bonds payable rises by a constant amount each year.
• C)interest expense is calculated by subtracting the amortized premium from the interest payment that is to be made.
• D)interest expense rises each year.

---

Definitions:

Insolvent

The condition in which an individual or organization is unable to meet financial obligations due to lack of funds.

UCC 2-702(2)

A provision within the Uniform Commercial Code that allows sellers of goods to withhold delivery if they discover the buyer to be insolvent, under certain conditions.

Reclaim Goods

The process of recovering goods that have been sold or disposed of, often seen in bankruptcy or default situations.

Cover

In contract law, the purchasing of goods or services by a buyer to replace those promised but not delivered by the seller.