tr a company uses the effectve interest rate method the amount of a bond discoun
ID: 2574548 • Letter: T
Question
tr a company uses the effectve interest rate method the amount of a bond discount on the maturity date Immedlately after the last amortization is recognized will be the same as It would have been if the company had used the straight-line method. O more than it would have been if the company had used the straight-line method. O less than it would have been if the company had used the straight-line method The answer cannot be determined from the information provided eBook & Resources eBook Use the effective interest rate method to amortize bond discounts References Multiple Choice Learning Objective: 10-06 Use the effective interest rate method to amortize bond discounts. Ask your instructor a questionExplanation / Answer
Answer
3-
less than it would have been if company had used the straight line method
because under straight line same amount is charged as amortization on bond while in effective interest rate method, amortized amount is calculated on carrying value of bond which is reducing on each interest payment date so it would be low from straight line method on last amortization period.
Answer
1-
the same as it would have been had the company used the straight line method
because cash payment would always be same whether use straight line method or effective interest method
Answer
3-
less than it would have been if company had used the straight line method
because under straight line same amount is charged as amortization on bond while in effective interest rate method, amortized amount is calculated on carrying value of bond which is reducing on each interest payment date so it would be low from straight line method on last amortization period.
Answer
1-
the same as it would have been had the company used the straight line method
because cash payment would always be same whether use straight line method or effective interest method
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