Question

Use of the effective-interest method in amortizing bond premiums and discounts results in1. a greater amount of interest income over the life of the bond issue than would result from use of the straight-line method.2. a varying amount being recorded as interest income from period to period.3. a variable rate of return on the book value of the investment.4. a smaller amount of interest income over the life of the bond issue than would result from use of the straight-line method.

Answer 1

b. a varying amount being recorded as interest income from period to period.

Step-by-step explanation:

Use of the effective-interest method in amortizing bond premiums and discounts results in

a. a greater amount of interest income over the life of the bond issue than would result from use of the straight-line method.

b. a varying amount being recorded as interest income from period to period.

c. a variable rate of return on the book value of the investment.

d. a smaller amount of interest income over the life of the bond issue than would result from use of the straight-line method.