Under the effective-interest method of bond discount or premium amortization, the periodic interest expense is equal to Select one: O a. the market rate multiplied by the beginning-of-period carrying amount of the bonds O b. the stated (nominal) rate of interest multiplied by the face value of the bonds.

Under the effective-interest method of bond discount or premium amortization, the periodic interest expense is equal to Select one: O a. the market rate multiplied by the beginning-of-period carrying amount of the bonds O b. the stated (nominal) rate of interest multiplied by the face value of the bonds.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 10MC: The effective-interest method of bond amortization finds the difference between the ________ times...

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The effective-interest method of bond amortization finds the difference between the ________ times the ________ and the ________ times the ________. A. stated interest rate, principal, stated interest rate, carrying value B. stated interest rate, principal, market interest rate, carrying value C. stated interest rate, carrying value, market interest rate, principal D. market interest rate, carrying value, market interest rate, principal
When a bond sells at a discount, the carrying value ________ after each amortization entry. A. increases B. decreases C. stays the same D. cannot be determined
Does issuing a bond at a discount increase or decrease interest expense over the life of the bond?
When bonds are redeemed before maturity, how is the gain or loss on redemption determined? Why does the calculation differ for bonds issued at face value, at a premium, and at a discount?
The premium on bonds payable account is shown on the balance sheet as A contra asset. A reduction of an expense. An addition to a long-term liability. A subtraction from a long-term liability.
Use the worksheet to compute the bond issue price if the effective interest rate is 9%. Bond issue price _____
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.