The appropriate method of amortizing a premium or discount on issuance of bonds is the effective interest

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The appropriate method of amortizing a premium or discount on issuance of bonds is the effective interest method.

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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 answer-question

Intermediate Accounting

ISBN: 978-0324300987

10th Edition

Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones

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Posted Date: Feb 11, 2019 10:04 AM

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The appropriate method of amortizing a premium or discount on issuance of bonds is the effective interest

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1 Effective interest method is a method of amortization of discount or premium In this method interest expense is calculated on the carrying amount of ... View the full answer

Intermediate Accounting

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