The effective-interest method of bond amortization finds the difference between the ________ times the ________ and...
The effective-interest method of bond amortization finds the difference between the ________ times the ________ and the ________ times the ________.
- stated interest rate, principal, stated interest rate, carrying value
- stated interest rate, principal, market interest rate, carrying value
- stated interest rate, carrying value, market interest rate, principal
- market interest rate, carrying value, market interest rate, principal
The International Financial Reporting Standards require the use of ________.
- any method of amortization of bond premiums
- the straight-line method of amortization of bond discounts
- the effective-interest method of amortization of bond premiums and discounts
- any method approved by US GAAP
Homework Answers
1.
b.Stated interest rate, principal, market interest rate, carrying value.
The effective interest method of bond amortization finds the difference between the stated interest rate times the principal and the market interest times the carrying value.
amount of amortization under effective interest method = (market rate * carrying value) - (stated rate *book value)
2.
c. The effective - interest method of amortization of bond premiums and discounts.
The IFRS requires effective interest method to be used.
The US GAAP states effective interest method as a preferred method.
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