Answer:
A discount on bonds payable: Occurs when a company issues bonds with a contract rate less than the market rate.
Step-by-step explanation:
A discount on bonds payable: Occurs when a company issues bonds with a contract rate less than the market rate
Premium on bonds payable - occurs when a company issues bonds for an amount greater than their face or maturity amount. This causes the bonds to have a contract interest rate that is higher than the market interest rate for similar bonds.
On the other hand, Discount on bonds payable - occurs when a company issues bonds for an amount lesser than their face or maturity amount. This causes the bonds to have a contract interest rate that is lesser than the market interest rate for similar bonds.