Q11RQ
Question
In regard to a bond discount or premium, what is the straight-line amortization
method?
Step-by-Step Solution
Verified Answer
Allocating equal discount or premium over the interest period is the straight-line amortization method.
1Step 1: Definition of bond discount
A bond is the situation when the market price is lower than the face value of the bond is the bond discount.
2Step 2: Straight-line amortization
Straight-line amortization is a method in which an equal amount of discount or premium is amortized every year. This is a straightforward method to amortize the discount or premium of bonds.
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