Lecture Video Assessment 10-55 [LO 06] If a company uses the effective interest

Question

Lecture Video Assessment 10-55 [LO 06] If a company uses the effective interest rate method, the amount of the cash flow from operating activities will be the same as it would have been had the company used the straight-line method. more than it would have been had the company used the straight-line method. O less than it would have been had the company used the straight-line method. O None of the answers is correct. Lecture Video Assessment 10-54 [LO 06] If a company uses the effective interest rate method the amount of a bond discount on the maturity date immediately after the last amortization is recognized will be the same as it would have been if the company had used the straight-line method. 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.

Explanation / Answer

1 The amount of cash flows from operating activities would be same under both methods Option 1 is correct 2 The amount of bond discount after last amortization would be same under both methods Option 1 is correct

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