Multiple Choice
On January 1,2010,a corporation issued a $400,000,12% bond.The interest is payable semi-annually on June 30 and December 31.The issue price was $413,153.Assuming the effective-interest method of amortization is used,which of the following statements is incorrect?
A) The market rate of interest on the sale date was less than the stated rate of interest.
B) The book value of the bond will decrease as the bond matures.
C) The interest expense will decrease as the bond matures.
D) The amortization of the premium on bonds payable will decrease as the bond matures.
Correct Answer:
Verified
Correct Answer:
Verified
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