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Question
Which of the following statements is not correct regarding amortization when using the effective interest method (basis)?
A. Amortization of discount on bonds payable (bond discount) increases in later years relative to earlier years of a bond's life.
B. Amortization of premium on bonds payable (bond premium) increases in later years relative to earlier years of a bond's life.
C. Amortization of both premium on bonds payable (bond premium) and discount on bonds payable (bond discount) decreases in later years relative to earlier years of a bonds life.
D. Amortization of discount on bonds payable (bond discount) results in an increase in interest expense and in an increase in the bond's carrying value.
Answer
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