Asked by miriam canela on Jun 19, 2024
Verified
Amortization of bond discounts for bond investments will
A) increase Interest Income and increase the Investment account.
B) increase Interest Income and decrease the Investment account.
C) decrease Interest Income and decrease the Investment account.
D) decrease Interest Income and increase the Investment account.
Bond Discounts
The difference between the face value of a bond and its selling price when the bond is sold for less than its face value.
Interest Income
The income earned by an entity from its investments in interest-bearing financial instruments, such as bonds or savings accounts.
- Acquire knowledge of the techniques for logging the collection and systematic charge allocation of interest from bond investments.
Verified Answer
JF
Jason FleitasJun 25, 2024
Final Answer :
A
Explanation :
Amortization of bond discounts increases the carrying amount of the bond investment (thus increasing the Investment account) and is recognized as additional interest income, thereby increasing Interest Income.
Learning Objectives
- Acquire knowledge of the techniques for logging the collection and systematic charge allocation of interest from bond investments.