Multiple Choice
Which of the following statements regarding the effective-interest method of accounting for bonds characteristics is false?
A) GAAP requires use of the effective interest method.
B) The amount of periodic interest expense decreases over the life of a discounted bond issue when the effective-interest method is used.
C) Over the life of the bonds, the carrying value increases for discounted bonds when using the effective-interest method.
D) The effective-interest method applies a constant percentage to the bond carrying value to compute interest expense.
Correct Answer:
Verified
Correct Answer:
Verified
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