Question

When the straight-line method of amortization is used for a bond premium, the amount of interest expense for an interest period is calculated by:

a. adding the amount of premium amortized for that period to the amount of cash paid for interest during the period.
b. subtracting the amount of premium amortized for that period from the amount of cash paid for interest during the period.
c. multiplying the face value of the bonds by the stated interest rate.
d. multiplying the face value of the bonds by the market interest rate.

Answer 1

The answer is letter A.

Step-by-step explanation:

a. adding the amount of premium amortized for that period to the amount of cash paid for interest during the period.