9. Interest expense recognized each period on zero-coupon bonds, sold at a discount, is equal to the a. credit to Cash b. difference between the cash payment and the discount amortization c. credit to Discount on Bonds Payable d. sum of the cash payment and the discount amortization

9. Interest expense recognized each period on zero-coupon bonds, sold at a discount, is equal to the a. credit to Cash b. difference between the cash payment and the discount amortization c. credit to Discount on Bonds Payable d. sum of the cash payment and the discount amortization

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 4PEB

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Question

9. Interest expense recognized each period on zero-coupon bonds, sold at a discount, is equal to the

a. credit to Cash
b. difference between the cash payment and the discount amortization
c. credit to Discount on Bonds Payable
d. sum of the cash payment and the discount amortization

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When the effective-interest method is used, the amount of bond discount amortized eachinterest period is equal to thea. amount of interest expense less the cash paid for interest.b. amount of interest expense plus the cash paid for interest.c. face value of the bond times the market interest rate at the date of issue.d. face value of the bond times the stated interest rate.
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