Bonds amortization of premium, bond interest expense
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1. The amortization of premium on bonds payable
a. will increase bond interest expense.
b. should take place over a period not to exceed 40 years.
c. will decrease bond interest expense.
d. will increase bond interest revenue.
2. A corporation issued $600,000 of 8%, 5-year bonds on January 1, at 102. Interest is paid semiannually on January 1 and July 1. If the corporation uses the straight-line method of amortization, the amount of bond interest expense to be recognized on July 1 is
a. $48,000.
b. $24,000.
c. $25,200.
d. $22,800
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Answers to multiple choice questions on amortization of premium on bonds payable, amount of bond interest expense to be recognized
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1. The amortization of premium on bonds payable
a. will increase bond interest expense.
b. should take place over a period not to exceed 40 years.
c. will decrease bond interest expense.
d. will increase bond interest revenue.
Answer: c. will decrease bond interest expense.
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