Question

When the effective interest rate method of amortization is used, the amount of interest expense for a given period is calculated by multiplying the face rate of interest by the bond's carrying value at the beginning of the given period. True/False?

Answer 1

Answer: The statement given in the following question is false.

Explanation: While computing the effective interest rate method of amortization; we use the the market rate of interest thereby multiplying it  by value of the bond at the beginning of the given period. In the given question it's said that we consider the face value , which isn't right.

Therefore the statement given in the following question is false.