Asked by
Kalpana Jethi
on Dec 06, 2024
Verified
A theoretical difference between the effective interest method and the straight-line amortization method is that
A) the effective interest method is easier to use
B) the effective interest method can be used if there is a material difference in the computation when compared to the straight-line method
C) the effective interest method produces a result that is based on a constant rate of interest
D) the effective interest method produces a result that is based on a constant interest expense
Effective Interest Method
An accounting practice used to allocate bond premiums or discounts over the life of the bond.
Straight-Line Amortization
A method of allocating an intangible asset's cost evenly across its useful life, resulting in a consistent expense amount each period.
Theoretical Difference
Refers to the conceptual distinctions between ideas, methods, or phenomena.
- Implement the effective interest procedure to evaluate interest expense and the amortization of bond discount or premium.
Verified Answer
CR
Learning Objectives
- Implement the effective interest procedure to evaluate interest expense and the amortization of bond discount or premium.