Question
On January 1, 2014, a corporation issued $400,000 of 10-year, 12% bonds. The interest is payable semi-annually on June 30 and December 31. The issue
On January 1, 2014, a corporation issued $400,000 of 10-year, 12% bonds. 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?
The market rate of interest on the sale date was less than the stated rate of interest. | ||
The book value of the bond will decrease as the bond reaches maturity. | ||
The interest expense will decrease as the bond reaches maturity. | ||
The amortization of the premium on bonds payable will decrease as the bond matures. |
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