A Company Uses the Effective Interest Method to Amortize a Bond

question 57

Multiple Choice

A company uses the effective interest method to amortize a bond premium.Which of the following statements is true regarding the carrying value of the bond?

• A)The carrying value will decrease by equal amounts each year.
• B)The carrying value will decrease by smaller amounts each year.
• C)The carrying value will decrease by larger amounts each year.
• D)The carrying value will be lower than the face value of the bond until maturity.

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Definitions:

Fallacy

An incorrect reasoning process that results in the invalidity of an argument.

Raccoons

Medium-sized mammals known for their distinctive facial mask and ringed tail, often found in North America.

Dangerous Animals

Animals that pose a threat to human safety due to their behavior, physical capabilities, or potential for transmitting diseases.

Pet Raccoon

Refers to the uncommon practice of keeping a raccoon, a typically wild animal known for its dexterity and intelligence, as a domestic pet.