Either the Effective-Interest Method or the Straight-Line Method of Amortization

question 104

Multiple Choice

Either the effective-interest method or the straight-line method of amortization will always result in:

• A) the same amount of interest expense being recognized each year.
• B) the same amount of interest expense being recognized over the term of the bonds.
• C) an increase in interest expense if premium or discounts were not amortized.
• D) the same carrying value each year.

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Definitions:

Significant Individually

Refers to the condition when an individual variable or factor is statistically significant on its own within a model or experiment.

Annual Income

The total amount of income received in a year from all sources before taxes and other deductions.

Square Foot

A unit of area measurement equal to the area of a square with sides of one foot in length.

Family Size

A demographic term that refers to the number of individuals in a household, including parents and children.