Question

For the issuer of 20-year bonds, the amount of amortization using the effective interest method would decrease each year if the bonds are sold at a: Discount Premium No No Yes ojo No Yes Yes Yes No

Answer 1

Answer) option A No No in case of bonds issued at premium bonds carrying value will decrease thus interest expense will decrease and hence increasing the amount of premium amortized in case of bonds issued at discount the carrying value will increase , thus interest expense will increase and so will the amount amortized thus in none of the above cases it will decrease