How Will the Effective Interest Rate Method of Amortization Affect

question 105

Multiple Choice

How will the effective interest rate method of amortization affect the interest expense incurred on a bond issued at a premium?

• A) Interest expense will decrease as the carrying value of the bond decreases.
• B) Interest expense will decrease as the carrying value of the bond increases.
• C) Interest expense will increase as the carrying value of the bond increases.
• D) Interest expense will increase as the carrying value of the bond decreases.

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