Amortization of Bond Premium or Discount The appropriate method of amortizing a premium or discount on issuance
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Amortization of Bond Premium or Discount The appropriate method of amortizing a premium or discount on issuance of bonds is the effective interest method.
Required:
1. What is the effective interest method of amortization, and how is it different from and similar to the straight-line method of amortization?
2. Explain how a company computes amortization using the effective interest method and why and how amounts obtained using the effective interest method differ from amounts computed under the straight-line method.
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
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