when a bond payable is issued at a discount, which of the following would not occur as the bond is amortized each year? multiple choice the amount of amortization would be subtracted from net income to arrive at cash flows from operating activities. interest expense would increase. when the effective-interest method is used, the discount amortization for each year the bond approaches maturity would increase. the book value of the bonds would increase.

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08-12-2022
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when a bond payable is issued at a discount, which of the following would not occur as the bond is amortized each year? multiple choice the amount of amortization would be subtracted from net income to arrive at cash flows from operating activities. interest expense would increase. when the effective-interest method is used, the discount amortization for each year the bond approaches maturity would increase. the book value of the bonds would increase.

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Tutorconsortium417 Tutorconsortium417 · Answer 1 · 2022-12-16T17:36:17+01:00

The sole distinction is that there are no monthly payments and the bond is offered at a substantial discount.

The distinction is that there aren't any coupon repayments and the bond is offered at a substantial discount. Therefore, the discount amortisation for the year is included in the overall interest expenditure.

objectivity in Reporting

The fair valuation of a bond according to the current interest rate is equal to the bond's book value when it is issued. The bond's carrying value can be either at par, premium, or discount based about where interest rates stand in relation to the coupon rate.

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