When the Effective Interest Method of Amortization Is Used for a Bond

question 173

Multiple Choice

When the effective interest method of amortization is used for a bond premium,the amount of interest expense for an interest period is calculated by multiplying the

• A)carrying value of the bonds at the beginning of the period by the face interest rate.
• B)face value of the bonds at the beginning of the period by the effective interest rate.
• C)carrying value of the bonds at the beginning of the period by the effective interest rate.
• D)face value of the bonds at the beginning of the period by the face interest rate.

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Definitions:

Express Authority

Authority expressly given to an agent or representative, defined explicitly in words or writing.

Apparent Authority

a situation where a person appears to have the authority to act for another, leading a reasonable third party to believe that authority exists.

Real Estate Development

The process of purchasing land, financing real estate deals, building or having buildings constructed, and selling or leasing the finished product to end-users.

Express Authority

Is the specific powers granted by a principal to an agent in a contractual agreement to perform certain actions on behalf of the principal.