When Computing the Amortization for a Discount or Premium for a Bond

question 108

True/False

When computing the amortization for a discount or premium for a bond issue only the effective amortization method is permissible under IFRS. Under GAAP however, the straight line or the effective interest method can be used with no regard to materiality.

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Definitions:

Cost of Goods Manufactured

The total production cost of goods that are completed during an accounting period, including raw materials, labor, and overhead expenses.

Direct Labor Costs

Expenses directly associated with the labor used in the production of goods or services.

Manufacturing Overhead

Costs incidental to the manufacturing process that do not include the costs of direct materials and direct labor.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of materials and labor.