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When Using the Effective-Interest Method of Amortizing a Discount or Premium

Question 64

Multiple Choice

When using the effective-interest method of amortizing a discount or premium, interest expense is calculated by multiplying the:


A) contract interest rate by the face value of the bonds
B) effective-interest rate by the carrying value of the bonds
C) effective-interest rate by the face value of the bonds
D) contract interest rate by the carrying value of the bonds

Correct Answer:

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